Do you regularly talk about money in your relationship? How much time do you spend together budgeting and planning your finances? I’m sure hearing these questions makes you cringe. Money is not a romantic subject. It is even often the main cause of conflicts and divorces.
The situation is even worse when a person in the couple is struggling with debt problems. Sometimes, both members of the couple have significant financial worries.
Financial problems are a great source of stress and when they fit into the couple they can kill the flame.
A Money magazine survey reports that money problems are the root cause of conflict in couples, ahead of housework, sex, snoring and meal planning.
Money-related conflicts affect millennials and baby boomers alike. In fact, 20% of these claim to have regular disputes about credit card debt. For 61% of boomers, debt problems are simply unattractive.
My debts, your debts, our debts
As a couple, there are several types of debts: personal debts and the couple’s debts. For example, your credit card and auto loan are usually personal debts (depending on the contract and endorsements of course) while the mortgage and joint line of credit are typical examples of common debts.
In the couple, everyone is responsible for paying their personal debts, but both members of the couple are responsible for paying the joint debts, even if there is separation. This means that even if only one person is responsible for the debt (on the line of credit for example), both are responsible for the debt. Thus, if a person goes bankrupt, the debt must be assumed 100% by the spouse.
It is not uncommon in a couple that one hides his debts to another. For many this debt is shameful and we do not want to worry his spouse with his problems. Sooner or later, if the problem is not attacked at source, the debt is only getting worse and we are catching up with higher and lower minimum payments.
Whether you decide to tackle it alone or as a couple, you need to put in place an action plan and review your budget to plan debt repayment. We can not slip the problem under the carpet indefinitely.
Depending on the extent of the financial problems, it is sometimes necessary to consult a professional such as an authorized insolvency trustee (SAI). The SAI can analyze your financial situation and offer you multiple solutions to settle your debts.
Money: a source of conflict
According to a report by CIBC, although 99% of couples admit that talking about money is important, only one-third of newlyweds admit to having seriously discussed their personal finances.
Money can hurt your future relationship; in fact, one in four married or common-law couples (27%) recognize that financial stress affects their relationship. The figure is even higher (41%) for young couples. In fact, recent studies in the United States indicate that financial disagreements are important indicators of divorce; couples arguing over money several times a week are 30% more likely to divorce than those who do less than once a month.
A joint account?
Does having a single joint bank account and putting everything in it is a good idea? Not necessarily!
The joint account is an excellent tool for paying common expenses: mortgage, taxes, insurance, groceries, expenses for children, etc. However, it is important that everyone keeps a personal bank account to pay for their personal expenses without worrying about the judgment of the other. It is very important to reserve a sum of money that you can spend freely according to your tastes, needs and even small impulses.
In the end, the most important thing is to communicate and make sure that both members of the couple are comfortable with the decisions. Money problems bring stress and stress is a poison in relationships.