My Money, My Choices
Gail Vaz-Oxlade is a personal finance writer, television host and radio broadcaster. Every Wednesday, she arms Metro readers with tips to keep spending in check.
Is your relationship financially healthy? Take this quiz
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People have all kinds of misconceptions about the rules around money and relationships. So here’s a quick test to see what you may or may not know about couple’s money.
Don’t peek at the answers until you’ve chosen True or False for the following statements:
1. It only takes one person good with money in a relationship to make money management work.
2. Married partners have the right to speak for their better halves when it comes to medical treatment if their mates can’t speak for themselves.
3. Getting a joint line of credit is a good way for you both to build your credit histories.
4. Once you’re living together, splitting everything 50/50 is the way to go when it comes to managing the bills.
5. Talking things over and creating a plan means you’re more likely to save.
So, how on the money were you?
1. False. If only one person has high self-control, the couple is more likely to fail. According to researchers from Boston College and the University of Pittsburgh, couples of mixed self-control jointly tend toward the lower end of the self-control spectrum, not the higher. Why? It seems that high self-control partners tend to want to please low self-control partners and end up indulging their partner’s wants and desires. So instead of pulling the financial idiot into the light, the high self-control person gives in and the money management suffers.
2.False. Not without a power of attorney they don’t. Until you’ve executed personal care powers of attorney, you don’t have any right to say what can and can’t be for your mate. While you’re at it, make sure you also execute financial powers of attorney so you can take care of the money, too.
3. False. A little known fact is that the credit history for joint credit is only reported in the name of the first person who is listed on the documentation. And the risk you take by having joint credit — except where both signatures are required — is huge. Sure, you know he or she loves you now, but what if your pal goes nutsy-cuckoo and spends all that credit? You’re firmly on the hook, baby.
4. False. Yes, 50/50 sounds fair, but that’s only true if you’re both making a similar income. If one makes more, that person should pay more of the joint expenses so the other person isn’t left feeling like a poor mouse. So split your joint expenses proportionate to income.True. A 2013 HSBC survey reports that people saved 49 per cent more if they had a financial plan to save money. The results were not simply a matter of having more resources to start with, but of using them wisely.
Here are some more questions to think about if you feel like its time to take the next step:
Why are we doing this?
People move in together for all kinds of reasons, some of which are really dumb, like, “This will be a good test of our relationship,” or “I want to give him a break so he can pay off his bills.” Or “We spend so much time together anyway, we might as well live together.” This is a big deal so you should give the “why” some serious thought. If it’s going to move you towards your goals as a couple, great. If it’s because you love each other to bits and want to build a life together, terrific. If it seems like a lame reason, it probably is.
How will this work for us both financially?
If one person keeps bringing home new furniture and the other ends up picking up the full rent tab, someone is going to be miserable, so have a plan for how you’ll be co-existing financially when you cohabitate. Start with full disclosure: what do you each own, what do you each owe, how much do you make, and how will you use that money.
How well do our lifestyles match?
One of you likes to pah-tay, while the other would rather stay home and read a good book. One of you loves eating out while the other thinks saving for that vacation should be the priority. Have you talked about what you goals are? What’s most important to you? If you don’t naturally “match up” how will you bridge your differences?
What are your expectations?
Believe that it’s the man’s job to pay for stuff? Bathroom cleaning is woman’s work? Get on the same page in terms of what you expect from your ‘buddy’ before you turn them into a life partner.
How will we fight?
How will you negotiate the things that may create conflict? Does one of you need cool-down time? What does that look like? While you’re at it, make an agreement right from the start about what you’ll do if the kaka hits the fan and you split. While you like each other is the perfect time to talk about how you’ll treat each other when you aren’t feeling quite so generous.