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Couples and Money

Wesley Watkis | 11/10/2011, 10:12 a.m.

From the outside, couples have it all when it comes to money. Many relationships have two working heads of household, with a nice, padded double income to provide stability. Other relationships have one full-time professional and one stay-at-home partner, who can take care of the house and cooking on a budget. It seems like the ideal scenario.

However, this is rarely the case. One of the biggest challenges of taking care of finances when there are two people to consider is that it's very easy for arguments and bad money habits to get in the way of the relationship. The result is often fighting, divorce, and a tough financial situation for everyone involved.

Why the Subject of Money is So Hard to Avoid

Of over half of the couples who undergo a separation or divorce, the culprit is money. No matter what type of income a family has, there rarely seems to be enough of it, and there never seems to be an easy way to discuss it. Many couples struggle with:

* How much of the family income should go to maintaining quality of life?

* How much of it should go into savings?

* Who should make the financial decisions?

* What happens when a nest egg disappears?

* What happens when there simply isn't enough to pay the bills?

* What if one partner is more of a financial risk taker than the other?

* What if there is a sudden change in jobs, family size, or financial situation?

When the economy takes a turn for the worse, all these questions become harder. After all, issues that might not have been a deal-breaker before suddenly hold the key to the entire relationship and the balance of power within it.

How Couples Can Address Financial Issues

As with any kind of long-term financial investment plan, the most important tool for being an economically sound couple is flexibility. Not only do couples need to be able to adjust the way they spend and view money, but they also need to be flexible with one another. Sometimes, this is as simple as finding ways to cut back the weekly grocery bill, and sometimes it's as huge as downsizing a home to start building a more viable retirement plan.

It's also important for both partners to take an interest in the long-term financial plans. This way, there are no secrets when it comes time to cash in a 401(k) or to start selling bonds to pay for the kids' college. If both partners know from the very beginning what type of savings plan is in place and what each party is contributing to the bigger picture, there is a much smaller chance of unpleasant - and potentially disastrous - surprises later on.

Relationships are difficult, for a variety of reasons not related to money. That's why it's best to start taking care of the financial questions early on. By working with a financial advisor before or after the marriage vows are exchanged, you can have that solid foundation firmly in place while you build an entire life together.

Questions? Email me at wesley@thewandwgroup.com and visit our website at http://www.thewandwgroup.com. New Money Talk is a weekly article focusing on retirement, personal finance, and estate planning.

Comments and questions are welcome, but because of the volume of email, personal responses are not always possible.