Finances matter in a committed relationship. Whether one person handles most (or all) of the expense, or whether everything is split equally, who pays (or doesn’t pay) the bills impacts the relationship in multiple ways, some seemingly unrelated to money.
A study conducted by researchers from Kansas State and Texas Tech universities found that disagreements about finances were a greater predictor of divorce than conflicts over any other type of issue. “The emotional connection of money with safety and security in many people makes the financial disagreements more salient than other disagreements,” wrote one respondent to a separate study conducted by the Institute for Divorce Financial Analysts.
3 keys to success
The data from these studies demonstrate that the stakes are high. Ultimately your relationship, whether you’re married or not, might be at risk if financial decisions aren’t handled carefully, openly, and honestly. What steps should you take to avoid future problems?
Transparency. When you to live together, whether you choose to get married or not, it is vital for both parties to be transparent about their financial situation. This includes disclosing all debts, like credit cards or student loans, and income.
Clarity. How are expenses going to be handled? Split, shared, or all by one person? The conversation might not be a sexy one, but both people need to understand exactly who is going to pay what, when, and even how (from a joint or an individual account?). Not having a plan and just assuming it will all take care of itself is a sure way to set yourself up for future disagreements.
Understanding. Marriage changes the legal rights and obligations of both parties. You need to understand how it will impact your relationship and finances going forward. A prenup can sort out many of the financial issues involved in tying the knot, and end up making your relationship more resilient.