If you’re new around here, Molly’s Money is a series I do a few times a month where I answer your questions and talk about all things, well… MONEY. Everything from getting out of debt, dealing with debt, creating a budget, shopping on a budget, credit scores, etc. no topic is off limits! Got a personal finance question? Leave it in the comments below or feel free to e-mail me! I’d be HAPPY to answer it in an upcoming post!
Today’s topic isn’t necessarily a fun one, but it is probably one of the most important ones… if not THE most important one (then again is addressing money issues ever really… FUN?).
The truth is, money can be a relationship killer. I’m not JUST talking about in marriage or dating (although that’s the bulk of what I will address below), I’m also talking about money in all of your relationships – that includes your friends and family.
But it doesn’t HAVE to be a relationship killer, if you know how to handle it ahead of time (or if you know how to fix it later).
Let’s cut to the chase, money can be a tense topic among friends. Especially when one friend maybe makes more money than another friend. Or if one friend wants to do something that costs money but the other friend doesn’t. Or if one friend loans another friend money. Or if you’re rooming with a friend and a bill doesn’t get paid. Etc. etc. etc. You catch my drift. All of these things can build up – even if they are seemingly little things, and eventually resentment wins out.
I, unfortunately, have dealt with some of these issues in the past and it’s cost me a few friendships. I’m not going to go into the ugly details (because Lord knows, they are ugly), but know that they can be avoided and even repaired.
If you’re ever going to “borrow” money from a friend, set ground rules out right away. I don’t honestly recommend this, but if it’s gotta be done, discuss the terms TOGETHER, write them down, and sign it.
Put everything in writing.
I understand that you guys are “friends” and you trust each other, but TRUST ME… you want to have EVERYTHING in writing, down on paper, with agreed upon terms BEFORE you enter into any kind of money lending agreement.
This especially goes for rooming situations. If you are living with a friend, be sure to write down who pays what / who does what / who is going to take care of what AHEAD OF TIME. I can’t emphasize this enough.
Now, if it’s just a small amount like $20 for lunch or something along those lines, I LOVEEEE and use ALL THE TIME the “Epic Tab” app on my iPhone. Seriously – best tab app ever!
This app connects with your Facebook account and you can keep (in real time) track of how much money you owe a friend or how much they owe you. So, if you go out to dinner or do something together where one of you picks up the tab for another, you can easily keep track of it in the app! I use it ALL THE TIME!
Okay, your friend makes more money than you do. That’s fine. Get over it. Don’t let it be a point of contention between you two. Don’t sit around and wallow in the poverty mentality. If your friend who makes more money than you do wants to go out and do something and you don’t have money to do that something, just say so. Be honest. Offer to host your friends over at your place for a movie night or something.
But instead of either A) spending money you know you don’t have or B) turning into a negative Nancy and making your friend feel bad, just BE HONEST about your situation. You’re friends. At the end of the day, they should understand.
A lot of what I had to say about money and friendships goes for money and family, too. In fact, I’d say ALL of it goes. But we all know that with family, there’s an added layer of accountability or even stress that can make this an even tougher issue to deal with.
Once again, you’ll tend to have family members who make more than others. Or you’ll have a family member that may be struggling financially or another who has made some poor financial decisions. Whatever the case may be, there are always going to be discrepancies among family members and their individual financial situations.
This is one of those things where again, I just don’t recommend it.
Now, GIFTING money… okay. It’s a gift. The transaction is complete. But there’s a part of us that if we are loaned money from a family member, we are less inclined to want to pay it back right away. We figure, “Oh, they’ll understand. They know me.” And before you know it, you haven’t paid them back… and then resentment builds… and etc. etc. etc.
It’s a vicious cycle.
Again, what it all comes down to is laying ground rules and COMMUNICATING.
Honestly? I’m going to treat this one very similarly to how I would treat money and friendships. If you are just dating someone, you’re basically on the same level – financially – as you are with a friend. You have no legal obligation or connection to each other.
So once again… it all comes down to what? Communicating.
If you’re going out to dinner a lot and you’re finding that one of you is paying for it all or most of the time, offer to pick up the tab. Unless, of course, you’re dating the guy (or you ARE the guy) that refuses to let the woman pay for the meal. In that case, go for it! Chivalry isn’t dead, y’all. 🙂 🙂 haha!
You know what I’m saying though.
If you travel together and go on a trip together, lay out who is paying for what AHEAD of time. Set a budget for your trip. Discuss these things. Never assume you know who is paying for what. Because you know what happens what you assume?
And then, of course, when the relationship starts getting serious, this is the time to have the talk. Get it all out on the line. Be HONEST about your financial situations. Because trust me, once you are married, you cannot hide from these issues. I’ve written a Molly’s Money post on this very topic which you can read here.
…and last but certainly not least
There is a reason that money is one of the MAIN causes for divorce today. Money can become a HUGE issue in marriage, yet so often it just goes untouched. It’s almost “taboo” to talk about, which drives me NUTS.
So many marital issues could be avoided if couples just got on the same page about their finances and talked about things.
1. Combining your finances: I know, I’ve addressed this before, and I know this is a point of contention among many of you and many of you disagree with me on this. But TRUST ME, this is one thing that I will, to my grave, say that I am right on. Read my words: you CANNOT be on the same page financially if you have separate bank accounts.
You just can’t. It’s not possible. Sure, it might work for a while, but the inevitable is bound to happen. The inevitable being someone spends money without the other one knowing about it. Or a secret purchase is made that wasn’t agreed upon. Or one spouse is slowly going into debt while the other one is completely oblivious.
In marriage you just can’t have “YOURS, MINE, AND OURS.” It marriage it is ALL OURS.
Again, when you set it up in the Yours, Mine, and Ours way, it sounds good to start off… you know, you agree that once the bills are paid, the rest is left up to the individual with how they want to spend their money. NO NO NO. Eventually resentment builds over individual purchases. It also creates a divide in spending.
This basically eliminates one of the best parts of marriage – being able to support each other for richer or for poorer.
In fact, I had a someone send me an email last month disagreeing with me (quite vehemently) on the need to combine finances after marriage. She said, “Well, when I was married, we didn’t combine our money because I made more than he did and that’s just what worked for us at the time. So, I really have to disagree with you.” Well, what stood out to me about that statement was that she mentioned she WAS married… and even later admitted she is no longer married. I can only wonder if money was a factor in the end of her marriage… I’m not passing judgement, I’m just being honest here.
If combining finances is an issue in your marriage currently, as your friend and someone who cares about you… I strongly encourage you to talk about this with your spouse… stat. Are you worried about your credit score or something? I’ll go ahead and debunk that myth for you if you read this post.
2. Spending Money: Okay, so a lot of the reasoning behind the whole “no-combining finances” is because you want to be able to spend your money how you want.
Just because you’re married doesn’t mean you don’t still have some sense of financial freedom. It’s called setting a budget and communicating.
Every month John and I sit down and do our budget together and every month, in our budget, we have an agreed upon amount of “CASH” for that month. For example, in July, we each had $50 “CASH” to spend. It’s a line item in the budget. We are each free to spend that $50 however we so choose to spend it. No judgements. No questions.
The amount varies from month to month depending on our expenses, etc. BUT, we always have that little bit of “play” money.
Now, what about “special occasions” and things like that? Well, here’s a great example of how we worked something like that out for July as well.
At the end of June, I sat down with John and said, “Look, I’m very pregnant and very uncomfortable. I haven’t treated myself to a haircut in nine months and I haven’t had a pedicure of manicure in Lord knows how long. I would also like to have a few date nights with you before the baby comes. How can we make this happen without having to take it out of our cash?”
So, we sat down, we played with our budget, adjusted a few things here or there, and for July, we created a “Gettin’ the Lead Out” line in our budget that included enough money for me to get a mani/pedi, get a haircut, and for John and I to go on a couple date nights.
It was an agreed upon amount and there was no question, ifs, ands, or buts. It just worked! And I felt better, he felt better, we both felt better.
So, when things like that come up, we just TALK about it. We over communicate. Don’t let the budget ruin your life. Remember, until the month begins, YOU control the budget. Then, once the month begins, the budget controls you.
3. Financial Personality: It is pretty much a guarantee that a married couple is going to be divided when it comes to financial personalities. Sure, you could both be inherent savers or inherent spenders, but more often than not, one spouse tends to be the “saver” and one spouse tends to be the “spender.”
I have no qualms admitting that in our marriage, John is the saver and I am the spender.
Now, I have SERIOUSLY curbed that and I am SO MUCH BETTER than I used to be. But, it is much easier for me to spend money than it is for John. He hates to spend money (unless it is at Home Depot). So, we have to talk about things ahead of time and we know these things about each other… so we work our financial personalities out in advance.
It’s just important to communicate with your spouse what your habits are, where you know or see your shortfalls are, and where you want to improve. I am so thankful that I married a saver who is SO smart with money because I have, in turn, learned to become a saver. I now challenge myself to see how little I can spend on something or how much I can save on something. That’s not to say that I don’t want to splurge every once in a while or that there aren’t things that I want to just SPEND money on, but at the end of the day, it’s all about changing my habits.
And vice versa, John has learned that some things just COST MONEY… and that’s okay. We don’t ALWAYS have to buy generic Great Value brand cereal. We don’t always have to buy generic Great Value brand toilet paper that feels like sand paper.
We give and we take. It’s all about communication and compromise.
4. Set (Achievable) Financial Goals Together: If your goal is to be debt free, come up with a plan TOGETHER to reach that goal.
Celebrate milestones along the way (e.g. paying off a card, paying off a student loan, etc.)
Talk about your dreams and visions and set out a savings plan to reach that dream or vision. For example, John and I know that eventually we are going to outgrow our tiny little Cape Cod house (we’ve pretty much outgrown it already)… and we know that a bigger house is something we’ll need one day. So, we’ve put in place a savings plan to eventually be able to put 20% down on a bigger house in a few years. We’re not close to being there yet, but we have a plan in place and we have a goal and we are both excited about working towards that goal.
By setting financial goals together, you both get “on board” and you find yourselves working toward a common purpose which only brings you closer instead of driving you apart.
5. Respect and Communicate: At the end of the day, when the bills are paid and the money is spent… it’s all about respect. Husbands and wives need to feel respected, loved, and honored in marriage.
If money becomes a point of disagreement or contention, instead of BASHING the other, yelling at the other, or making the other spouse feel bad about whatever it is, it’s important to sit down together, talk about the issue, and understand and RESPECT your spouse for where they are coming from.
I am so so so proud to say that this is an area my husband and I do so well in. We have never had an issue with communication or respect. If there’s ever been even the SLIGHTEST tinge of an issue, we’ve sat down, talked it out, and come to an agreement. It has saved us and prevented what could have turned into major fights.
Communication and respect for your spouse can go a LONG way. In fact, it can go the longest way. It can save a marriage.