Find out the 5 worst financial mistakes that couples make--and how to avoid them for a happy future. Get the Money Girl book at http://MoneyGirlBook.com
Money Girl
321 MG 5 Worst Money Mistakes Couples Make
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He doesn't pay his student loans or credit cards, and collectors call every day. The problem isn't that he doesn't make enough money. He ignores his finances and won't talk about them. How can I make him buckle down and face the reality of his financial mess? I have excellent credit. So, should we open joint bank and credit card accounts to help him build credit and get back on track? If you've ever struggled with a loved one's financial mess, you can probably feel Nicole Marie's frustration. I'm going to give her some solid advice that she should take to heart. We'll also cover the five worst mistakes that couples make when it comes to money. You'll learn how to turn those mistakes around so you never put your financial future at risk. No matter if you just got engaged or have been hitched for 25 years, money is the leading cause of disagreement for couples. That's why it's so important to hash out financial issues long before you tie the knot or move in together. Here are the five worst money mistakes that trip up couples and how to correct them. Money mistake number one, not being honest. If one partner feels embarrassed about his or her financial troubles, they may want to hide their money mess. This can be especially true if the other person is doing great financially speaking. After all, who wants to be judged? If you're the one with the money mess, remember that a serious relationship or marriage is a true partnership. If you're holding back information about income or debts, that's the same as lying. Every detail about your finances should be put on the table. Financial troubles only get worse over time if you don't tackle them as a team. And if you're like Nicole Marie and it's your partner who has the money mess, you'll need to be sensitive to the reasons why he or she got into financial trouble in the first place. Before criticizing, ask your partner to open up about their financial history, how they feel about it, and what ideas they have for turning a bad situation around. If you're willing to listen to their side of the story, he or she may feel better about coming completely clean. Money mistake number two, letting emotions run high. Money is an emotional issue for most people. We work hard for our money and we get scared when we think our financial well-being is in jeopardy. But when emotions run high, we can say things that we don't mean. So never ambush your partner about money. Agree on a stress-free time to have a money discussion and treat it like a business meeting. Do your best to stay calm and objective no matter what. Money mistake number three, it's all in the details. When I say that you should disclose every detail about your finances, I mean every detail, your significant other should know how much you earn, the taxes you pay, the balance of every debt, bank account, and investment that's in your name. If each of you doesn't have an up-to-date personal financial statement, you should create one. This is a document that lists your assets and liabilities, such as cars, homes, retirement accounts, loans, and credit cards. When you subtract the balance of your total liabilities or debts from the total value of your assets, you've calculated your net worth. Nicole Marie should know her fiance's net worth, and he should know hers, no matter if they are positive or sadly negative numbers. In my award-winning guide to personal finance called Money Girl Smart Moves to Grow Rich, I show you step-by-step how to create your personal financial statement. 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Money mistake number four, not communicating. Most couples talk about money only after they're in financial trouble. This is really backwards. Communicating regularly about money is the best way to improve your financial health and stay on the right path. You might set a time to talk on a weekly or monthly basis about following a spending plan, paying off high interest debt as quickly as possible, or finding additional sources of income. Money mistake number five, not setting financial goals. While talking about money problems is certainly the first step, taking action is required to resolve them. You've got to be strategic by setting concrete financial goals, such as pay $500 extra toward credit card debt each month. If you need professional help to create a plan, consider using a financial advisor or a credit counselor. You can get counseling and education in person over the phone or online from the National Foundation for Credit Counseling at NFCC.org. I recently did a two-part podcast series about how to find a financial advisor that you may want to go back and reference. Now, let's get back to Nicole Marie and her fiance. One of the ways people end up in bad marriages is by fooling themselves that they can change the other person. If you think that simply saying "I do" will make someone more mature or wise with money, please think again. Someone who doesn't care about paying bills or making good on their debts isn't likely to change their tune very quickly, if ever. Unfortunately, you can't make someone, quote, "face the reality of their financial mess" as Nicole Marie asked. Nor should you make it your responsibility to fix their problem. Opening up joint accounts with someone in financial trouble isn't the solution, believe me. Your finances could be devastated if he or she deranged your checking account or racks up credit card debt that's also in your name. Like it or not, when you marry someone, their debts can become your problem. In most states, you generally aren't legally responsible for debt a spouse incurred before you got married. However, creditors can go after assets that the other spouse brings into a marriage. My advice for Nicole Marie is to have a frank conversation with her fiance about her concerns. If he isn't willing to talk openly about his finances, she should call off the engagement. There's no need to rush things. He might make a fun boyfriend, but won't be marriage material until he understands that his financial actions have serious consequences. For more money tips and advice, be sure to follow me on Facebook, Twitter, or Google+. On Facebook, just do a search for money girl. On Twitter, my handle is @LaraAdams, L-A-U-R-A-A-D-A-M-S with NoSpace. Also, sign up for the free money girl newsletter. You'll find links to everything I've mentioned and a transcript of this show on the Money Girl page at quickanddirtytips.com. Just look for episode number 321 called "Five Worst Money Mistakes Couples Make." I'm glad you're listening to Qing. That's all for now. Courtesy of Money Girl, your guide to our richer life. Betterment LLC is an SEC registered investment advisor. Brokerage services are offered by Betterment Securities, an SEC registered broker dealer and member FINRA SIPC. Investments are not FDIC insured and have no bank guarantee. They may lose value. Investing in securities involves risks, and there's always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and Betterment's charges and expenses. Not an offer or solicitation of an offer or advice to buy or sell securities in jurisdictions where Betterment and Betterment securities are not registered. 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