Love and Money
Love and Money
If you don't talk about it, you may end up with neither
By Carmen Wong Ulrich
How 'middle-class millionaires' spend
As if there aren't enough things you have to worry about when you're dating or falling in love or married with 2.5 kids, throw money into the mix and you've got a conflagration of emotional baggage, bad habits, control issues and earning limits that warrants its own federal bailout.
But ignoring the topic of money when you're in a relationship—or in the process of trying to form a relationship—is a recipe for bad moo goo gai pan—sticky and increasingly ugly over time. Maybe it's that she always expects you to pay, even though she makes just as much money as you do. Or that you have an expensive watch habit when you know that it's more important to pay off that nagging 5-figure credit card bill. Do you wish she'd go back to work now that your child is in school so you don't have to bear the full financial burden? Weighty stuff—but crucial to talk about, good to work through, and great to have a plan.
Here are some tips to make your money and love more peace-accord than escalation:
Start talking—early. Money talks don't begin with marriage or even when you move in together. They should start before you move in together and before you walk down the aisle, and then continue as your lives change and finances change. Find some entry points when you're dating and getting serious, such as, "So, how do you manage to afford this 2,000-square-foot loft on your physical-therapist salary?" Paying attention to how someone manages their money gives you a clue as to what kind of money match you'll be. Been together 10 years and still arguing? Take on a new attitude: partners in money as well as partners in love.
Learn from one another. My husband doesn't "do" credit card debt. Now, neither do I.
Have a joint household account plus separate accounts. If autonomy is an issue, do like one-third of British couples and one-quarter of Americans, according to a study by PayPal earlier this year—have one account that you both contribute to for household expenses, as well as separate accounts of your own. First, decide what expenses you consider "joint." Add up your monthly total. Next, since splitting things 50/50 only works if each of you makes exactly the same amount, add up your joint monthly take-home pay. What percentage of 100 is your contribution? For example, maybe you make $60,000 to her $40,000. You go in 60% percent of the monthly expense budget and she contributes 40 percent.
Appoint one in charge. Both of you don't have to sit hunched over a computer and paper shredder every other week, paying bills and balancing budgets. Which one of you pays better attention to calendars? Which of you is more on top of your credit? Or maybe one of you just enjoys dealing with money more than the other. The "winner" gets appointed household-finance manager. But, always make it a point to keep the non-number-cruncher in the loop. Allow room for veto.
Agree on a "reveal" amount. Last season my husband wanted this Italian stallion of a jacket that cost as much as a car payment. Thankfully, he mentioned it to me—household accountant—before plopping down the plastic. Our deal is that if either of us wants to spend a sizable chunk of dough, we have to run it by the other. One of us might know something the other doesn't and it may not fit into our financial plans. I knew that we had a lump tax payment in a few weeks and our bank account would take a big hit. Once he knew that, the jacket didn't seem as important. Whether it's $100 or $500, agree on a "reveal" amount. And no, skirting the deal by spreading out payments or buying piecemeal doesn't count.
In the end, it's all about what works best for you. If you're happy with your money/love situation, more power to you. Spread the word and your skills—the world can always use more financial cupids!