Finding love is the hard part, figuring out finances should be easy. If you find yourself arguing about money, sit down and map out your options. It’s actually not that difficult to address 3 main points:
1. Joint Expenses– Most modern couples that I know or have worked with have a joint account to pay joint bills, but then each party maintains a separate account for his/her own discretionary spending. Each couple may define joint expenses differently, but generally most people agree that the cost of food, housing and entertainment are joint expenses, and either you contribute to them equally or on a pro-rata basis given your respective incomes. The bottom line is to come up with a plan that both feel is fair.
2. Debt– If you are uncomfortable with how much someone spends, then maybe you should each maintain separate credit cards and each person is then responsible for his/her own charges? If you are going to use a joint credit card for expenses, maybe you need to establish a cap so that for example no one will charge more than $250 without the other party’s approval? If you don’t agree with someone’s choice to take on more debt, then don’t co-sign on the loan. The main point to glean from any debt situation is that we each have a right to limit what we are willing to take on.
3. Legal Responsibilities– When you live with someone, you tend to take on joint obligations, but not enough people take the time to actually legally acknowledge their rights and responsibilities to one another. If you want to be sure that you are not left in a vulnerable financial position, then perhaps it is worth investing in a formal agreement to memorialize your understanding of who is entitled to what. For non-married couples, cohabitation agreements can address major issues regarding paying expenses and rights to joint assets. For couples considering marriage, a prenuptial agreement can set forth what will remain separate versus joint, and if there will be any exposure to spousal support in the event of divorce. For those already married, a post-nuptial agreement can deal with all these issues. The goal of all three documents is to clarify everyone’s understanding of how the partnership will function financially so that all parties involved can go on to live happily ever after.
Here is the link to one of my favorite tv interviews about Love & Money: https://www.youtube.com/watch?v=MS6ekFYr9Pg
By Regina A. DeMeo, Esq.