Couples and Relationships: 4 Things Couples Should Shape Up Their Mutual Finances

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Handling your finances is one of the biggest metrics that determine when you've reached adulthood in the eyes of society, your parents, and potential romantic partners. Not having your finances in order is also something that can cause unwanted tension in a relationship, Living paycheck to paycheck has a sort of grunge appeal for those who like the starving artist lifestyle, but anyone who's been on that diet for a while will recommend getting your act together in a big hurry.

So, whether you're just starting a relationship, or you're thinking about popping the question, here are 4 finance basics every couple needs to have on lockdown.

#1: Banking

Unless your wages are so low that you use check cashing services exclusively (which is a reality for a lot of people out there), you probably use a bank. And while you might think, "what's the big deal? A bank is a bank," they really aren't all the same. For starters, ask if your bank requires a minimum balance to keep your account open. Look at the kinds of overdraft fees they charge, and ask if there's an annual service fee. Lastly, if you have a money market account, or a savings account, look at what sort of interest your bank is giving you. You might be getting screwed without even thinking about it.

#2: Bills

We all know how bills work. They show up in the mail, you send them a check, and everyone's happy. However, you might be paying a lot more for your bills simply because you're not looking at them. For example, if you are paying a monthly car insurance or medical insurance bill, see how much money you'd save if you bought your insurance in 6 month intervals instead. That can take a chunk out of your savings for right now, but that hole will fill in pretty quickly over the next six months. Ask your power company if they give you a discount for enrolling in an automated bill paying plan, and see if your Internet provider can cut you a deal on your package. A lot of the time you can spend less just by asking.

#3: Budgeting

If you had economics in school, you know how budgeting works. You sit down, figure out how much money you make a month, and then figure out how much you spend. If you know your gym membership is $19.99 a month, you put that in your budget. If you know your Internet is $39.99 a month, you put that in your budget. Fill out all the things that are a solid fee every month first.

Once you have your known values, you assign the variables. For example, sometimes your power bill is $25, and sometimes it's $50. You're better off assuming that it will be $50, because that way you have money left over at the end if it's low. The same goes for your fuel costs, and any other costs that are central to your life. After that's figured out, you assign a value to everything else. That's food, clothes, savings, entertainment, etc.

A word to the wise; don't budget down to the penny if you don't have to. A flexible budget is a forgiving budget, and you should be able to cover costs as you need to. Small costs, like a hike in gas prices or needing to get a new pair of shoes for work, anyway. Bigger costs will have to come out of savings.

#4: Plan Long-Term

This one doesn't start with a B, but it's no less useful. One of the keys to financial success is being able to plan for long-term goals in your life. For example, rather than buying a cheap $20 pair of work shoes every two months, buy a $60 pair of work shoes that will last for several years. Rather than buying fast food for lunch every day, buy bulk food you can eat for weeks.

A lot of this seems like common sense, but it's surprising how much money we save once we start knuckling down on our in-the-moment pleasures, and keep our eyes on the long-term prize.

I offer a 45 minute complimentary Clarity Session to show you how I can help you. Click here to book your session now!

Women and money: From first-time on your own to end-of-life decisions

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Women handed over property and wealth to their husbands upon marriage, and while usually granted a household stipend and spending money for themselves, law and custom frequently prevented them making major decisions about their own funds. Women could be widowed or divorced and left with no means of support. They could leave little of consequence to their daughters, thus perpetuating financial poverty and ignorance.

Times have changed, but when it comes to managing money, many women have yet to change their mindset. They still consider their parents or the arrival of a life partner to help manage their assets more important than learning to do it themselves.

A practical approach to changing women's outlook on their assets is looking at life's stages, and what they mean in terms of money management:

Savoring the single life while saving money:

  1. Put together a realistic budget: Use paper and pen, spreadsheet or a service such as Mint, Quicken or You Need A Budget. Use enough categories to account for spending and have one for mad money - to do whatever you want.
  2. Pay your savings first: Decide on a set percentage of your paycheck that goes into retirement fund and an emergency fund. The end of your working life isn't far away and life's "Oh $!#*" moments happen.
  3. Use coupons, think off-season, find free: Not every activity has to cost money. Supplement your singles budget with free or inexpensive outings, find off-season bargains and use apps and coupons to save money.
  4. If your job offers a 401(K) or other investment program, use it: Many companies match the money you invest up to a certain percentage. The company is giving you free money; take it and do not borrow from that fund. Roll it over to another retirement fund when you move on.

That special someone: marriage and money

  1. Conducting THAT conversation: When you know it's serious and the romance will advance, be bold and speak your money mind. It helps if you establish early on that you are a willing and equal financial partner in the dating game (going halves on dining out, cooking a special meal).
  2. Same page, same chapter, same book? You and your partner-to-be don't have to agree exactly when it comes to managing money. It does not hurt to agree on the major points, such as combined versus separate accounts and who pays for what expenses.
  3. Think on a timeline: You are together until death do you part. You don't need to buy a house a month after the wedding. Take time, save money and research what you want and where you want to live before making that investment.
  4. Wills and power of attorney: Marriage means updating your wills so each of you knows the other's decisions. At the same time, consider preparing power of attorney paperwork so you can act for the other if a medical crisis occurs.

Isn't (s)he precious - and expensive!

  1. That bundle of joy is a joy - and it's going to cost you: about $234,000 from birth to age 17. And that's without the costs of giving birth or sending the child to college. Once having children is an agreed-upon part of your lives, start saving.
  2. Research state-funded college tuition programs and prepaid college tuition plans and invest money early.
  3. Babies need food, clothing, shelter, love and attention. The latest gadgets cost money you could invest in their future. Skip the fancy toys or find them secondhand.
  4. Raising children is a blur of expectations, hopes and dreams, and all the bills that come with it. Encourage your kids to follow their desires, rather than live out your expensive failures.

When there's no happily ever after

  1. Divorce and widowhood happen; financial poverty is preventable. Have funds of your own at all times. Keep that money separate and in your sole control.
  2. Know the basics of your household budget, even if you are neither spending nor earning most of the income. This knowledge will help when suspicious bills arrive in the mail, or collection calls start.
  3. Know your rights: You can receive Social Security benefits if widowed or divorced, but certain circumstances apply.
  4. Divorce is painful and expensive, and investing in an attorney to protect your interests and assets is the least expensive part of the process.

The time to talk about life's final journey

  1. Will you have enough? It is a worry that women face because they tend to earn less over a shorter and less-stable working life. Can you make the money you have last a lifetime by working longer, living in a group home, downsizing or moving to a lower cost of living location?
  2. Consider your loved ones and the pain and confusion they face if you don't face the issue of death and money. Keep your will updated and make sure copies are available. Complete a living will and advanced directive so your end-of-life decisions are known.
  3. Keep copies of your credit cards, Social Security card, passport, banking information, insurance policies and computer passwords in a "death file." Survivors will need this information after you die to make important phone calls, pay final bills and close down accounts.
  4. Plan your funeral ahead of time. The average cost of a funeral is just over $7,000. While death is a certainty, the exorbitant expense isn't when you chose and pay for the arrangements in advance.

Contact me today by clicking here to schedule a life line session to help you transition into financial independence.

Protect Your Financial Future by Avoiding These Break Up Pitfalls

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The first weeks of a break up are hard. It's when you battle between doing nothing and doing anything to keep your mind off your ex. Unfortunately, heartbreak can lead to bad decisions that derail your financial goals. Here are three ways to get through a break up without ruining your finances.

Say No to Shopping

No matter what the name implies, retail therapy won't remedy your hurt feelings. Instead, it can damage all the work you've done to pay off your credit cards and pad your emergency fund. Forget about reaching for material things and opt to reconnect with friends. You avoid pointless spending and invest in those who are important.

Romance the Kitchen

After a break up, you barely want to get out of bed, let alone cook a meal. Give yourself a pity day to binge on your favorite takeout, then get back in the kitchen. Find inspiration in a new, fun recipe and prepare enough food to cover your off days. Dining out stretches your budget and your waistline, so the faster you're back in the kitchen, the better.

Escape Into a New Project

It's hard to establish a firm financial foundation without income, so make sure you don't take the blues to work. Shake up your routine by volunteering to assist a co-worker or taking on a new assignment. Not only will you distract yourself from thoughts of your ex, but you also gain a resume booster.

The best way to get over a break up is to focus on yourself instead of your past relationship. A vital part of that is making sure you don't jeopardize your financial future. While money won't make you happy, no one ever cries because they have too much. In fact, your strong financial position may give you something to smile about on the rough days.

I offer a 45 minute complimentary Clarity Session to show you how I can help you. Click here to book your session now!

 

Walking On Eggshells: Talking to Loved Ones About Money

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Attempting to broach any serious conversation with a loved one can lead to major anxiety depending on the topic at hand. Over the years, it has become more accepted to have frank discussions regarding a litany of subjects that were, at one time, considered too sensitive to approach.

 The money discussion seems to have remained the steadfast untouchable topic among some. However, open and honest discussion about money issues with friends and family doesn't have to be an uncomfortable chore.   Here are some easy-to-follow tips on opening up the lines of communication about money with those nearest and dearest to you.

  1. Start Slow - You may want to ease into the money conversation, especially with regards to older family members who may not be as open to frank money discussions. Maybe bring up a recent news item that is topical and could lead to a deeper discussion about money matters. 
  2. Remember You Are Not Alone - Money stress and worries are very common. It may surprise you to find that issues you are grappling with are issues for those you love as well. Finding common ground can help the discussion stay friendly and useful for all involved. 
  3. Stay on Point - When discussing something as personal as finances, it can be easy to veer off topic or begin to accuse or object. You may find that breaking the talk up into smaller talks held over a longer period of time is more effective. 
  4. Comparison is the Thief of Joy - Try to avoid comparing your financial situation with that of your loved one. We all have our own stories and we may be only receiving one side. Focus on your own situation in the midst of money discussions. If your discussion is one of concern or an attempt to help your loved one, try to remain focused on their current financial fitness and your role as listener.

  The goal in any potentially awkward discussion is to remain focused, calm, and reasonable. This is important even in the face of a discussion partner who may not always approach things the same way. If a discussion begins to go "south" it is probably best to take a step back and attempt to address the issue at a later date.   Money discussions do not have to leave a bad taste in anyone's mouth. If you concentrate on the purpose behind the discussion and the connections you have (and want to maintain) with those involved in the conversation, the result can be win-win for everyone.

I offer a 45 minute complimentary Clarity Session to show you how I can help you. Click here to book your session now!