Millions of boomers, either divorced or widowed, choose to enter a second or third committed relationship or marriage later in life. Many find it difficult sharing financial facts with their new partner and often delay such discussions. Yet revealing the truth about money matters is the critical subject that both partners should explore in depth before starting to share their lives and avoid financial bumps later on.
Many people are uncomfortable talking about money. Yet the issues won’t go away by simply ignoring them. Quite in the contrary, obscuring financial facts, postponing the discussion or hiding credit card or other debts from a partner will eventually cause a more serious problem when the truth is revealed, and it always is.
Young couples, starting out in life together, generally have not accumulated many assets. The picture is often different when divorced or widowed singles consider moving in together or remarrying. Whatever assets or debts each partner brings to the party should be discussed thoroughly and maybe repeatedly until all major money issues are clearly understood, resolved in a fair way so mutual decisions can be memorialized. Having a written record is very helpful, especially when unexpected financial events happen that require financial review and/or adjustments. In some cases couples prefer to have their financial arrangements documented by a lawyer. What are the hot button issues that should be resolved?
1) Ask for your partner’s credit report. If he or she refuses to follow through, it’s clearly a red flag but not necessarily a deal breaker. Bad credits and/or debts can be the result of illness, a job loss or another non-recurrent event. You may resolve the issue by discussion and a mutual decision on how to work it out.
2) Who pays for what and who actually pays the bill? That means who handles the actual check writing or regular electronic banking and who funds the account(s) from which money is drawn?
3) Have you made a budget and agreed on it? Are you savors or spenders? Discuss your individual history? Are you short at the end of the month or saving part of your income regularly? How will you handle emergencies if they occur? What happens if one partner simply blows the budget? Once you’ve developed a budget, the rules of the game should be clearly understood by both. If a hiccup occurs, solve it together.
4) Make your own rules regarding bank accounts. Some people feel most comfortable keeping their own account and paying their share of the bill as agreed. Some believe in establishing a single account. Still others prefer mine, yours and ours. The importance is to decide before you start mingling your funds that may cause potential legal ramifications such as “co-mingling” which both partners should understand.
5) Are children or elderly parents financially dependent on your partner? Is he or she required to support them temporarily or long term? Is the other partner willing to help? This is a delicate “must discuss” issue.
6) One partner has to give up a part time or full time position because of a “distance” problem when moving in together. Consider the financial and emotional ramifications. Weekends away, vacations. Who pays for what?
Financial issues always pop up. Resolving them requires honesty and fairness to avoid stress in your journey together.