Before you co-habitate, do your financial due diligence! It is not exactly the most romantic thing to do (sweetypie, how big is your credit card bill) but extremely necessary to avoid/minimize pesky arguments in the future. TheStreet.com‘s Michael Katz has come up with the following tips.
1. Discuss Financial Goals and Attitudes
You HAVE to talk about money and what it means to you before it gets to you. Differences in attitude can be a major source of tension. What will you use the savings for? A new car? Travel? House?
2. Review your Credit History and Debt
Credit card debt is a touchy subject. Do I want my husband to know that I blew half of my salary on shoes? One of the reasons why the Shopaholic series is so popular is because so many women can identify with Becky Bloomwood. Both partners need to figure out how to reconcile their spending habits. It takes a little bit a work but the spendshift and the saver can get along. The family finances are your joint responsibility. Remember, the rules on conjugal property apply to both assets and liabilities.
3. Update Beneficiaries, Will and Legal Documents
Remember the insurance policy you took out when you were still single? It’s time to revisit and update the beneficiaries. A tad morbid perhaps, but you should also make a will, power of attorney and health care proxy so that your families aren’t left with difficult decisions to make.
4. Create a budget
Your financial goals will not come to fruition without a good budget. It will let you know if you are living beyond your means. Oh, and make sure that you have an emergency fund (generally 3-6 months worth)
5. Joint or separate accounts?
What’s yours is yours? Or what’s yours is ours? There are pros and cons to either arrangement. Given our very different personalities and preferences, we decided to set up a common fund to take care of the family expenses and investments and at the same time maintain separate chequeing accounts for our personal expenses. So far so good.
Engaged? Show me the money!
Motherhood has a very humanizing effect. Everything gets reduced to essentials. ~Meryl Streep