Don't think I'm unromantic, but as Valentine's Day approaches I can't help but think about how complicated today's relationships can be and how money can be one of the stickier points. On the journey from first date to happily ever after, there are a lot of financial concerns that can cause more than a few bumps in the road. Because, bottom line, love affects not only your heart but also your wallet.
So while I'm a true believer in romance, I'm also very realistic about the importance of dealing with financial issues openly from day one. So in the spirit of helping today's couples understand how finances can impact a relationship, here are some thoughts on how to positively handle money questions at three crucial points in your love life.
The dating game: Who pays for what?
As if dating didn't come with enough uncertainties, money can add another layer of concern: Who pays for what? Traditionally, the male has been expected to pay. But changing gender and economic roles have pretty much tossed those traditions to the winds. So right up front, you need to think about how you'll handle the cost of getting to know each other.
On a first date, it's not unusual for the person doing the asking to pick up the check. But it's also quite appropriate for the other person to chip in. As time goes on, sharing the costs of dating can make it easier on both parties.
Whether a couple splits the tab or takes turns paying, unless one person's income is significantly greater than the other's, cost-sharing seems to be the fair thing to do. It doesn't have to be complicated. To me, it's just being considerate and conscious of the other person's budget--which sounds like a good start to a relationship.
Moving in together: The financial side of sharing an address
Moving in together is a big emotional step. It's also potentially a big financial step. From housing costs to day-to-day living expenses to entertainment, there are bills to pay. For the sake of your relationship, it's best to talk about these things in advance and decide how you want to spend your money individually and as a couple.
For instance, if you're renting, will you split the rent 50-50? If one of you owns the home and has a mortgage, will the other contribute to the house payment? Then there are big-ticket items like furniture and appliances. Will you share the cost equally? Or each pay for different items?
Likewise, day-to-day costs can trip you up if you don't agree on how you'll share them. Utilities, cable, Internet, cleaning services, groceries--these ongoing expenses can add up quickly. Figure out how you'll divide them. One approach is to come up with a monthly household budget and then each contribute an equal amount. If one of you earns more than the other, that person could offer to cover a greater percentage of the bills.
Paying for entertainment and travel is also a point for discussion. It's fine for one person to treat the other now and then, but neither partner should feel taken advantage of. There's no right or wrong way go about any of this. Each couple needs to find the right balance. The main point is to think ahead--and be fair.
Marrying your finances: Questions to ask
- How did your parents handle money, and what did they teach you in the process? Do you agree?
- What's more important to you: having fun today (and worrying about money later) or saving for your future? If you get an unexpected bonus or other windfall, are you more inclined to spend or save it?
- How would you rank your various life goals: e.g., buying a house, having a secure retirement, travel, having kids and sending them to college, or philanthropy?
- What's the biggest money mistake you ever made? Your smartest decision? What did you learn from these experiences?
- How much debt do you have, and what is your philosophy on debt?
- How good are you at paying your bills on time? What's your credit rating?
- Are you inclined to keep your current assets separate, or do you want to combine everything? How about debt?
As you discuss the last question, realize that as financially compatible as the two of you may be, saying "I do" doesn't mean you have to share everything. To me, it's important for every couple to find the right balance between togetherness and autonomy. That way, each person can maintain some financial independence.
One way to do that is to take a "yours, mine and ours" approach, keeping separate accounts for personal expenses and a joint account for shared expenses. You could take the same approach to assets you already have, keeping those separate while sharing the assets you accumulate during the marriage. The exact formula you land on is completely up to the two of you. The key is finding a balance that feels uniquely correct to your circumstances and relationship.
Taking care of each other--and yourself
While it may not seem very romantic, being aware of what love costs--and the potential issues that money can raise--may be the very thing that helps love grow. So don't shy away from understanding one another financially. Rather, see it as an important part of taking care of each other, yourself, and the future of your relationship. Happy Valentine's Day!
Looking for answers to your retirement questions? Check out Carrie's book, "The Charles Schwab Guide to Finances After Fifty: Answers to Your Most Important Money Questions."
This article originally appeared on Schwab.com. You can e-mail Carrie at firstname.lastname@example.org, or click here for additional Ask Carrie columns. This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager.
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