As gays and lesbians writing about money, we’ve grown weary of reading all the personal finance content that’s written from the perspective of straight marriages. So at Queercents, we’ve turned the tables on money and relationship advice by asking: What if all of our favorite money columnists were gay? Would their advice be more relevant to our lives?
We think the answer is yes! And as such, this is our weekly series called In Search of Gay Money where we reprint their advice by swapping out pronouns and a few other words to make it seem like everyone is queer!
Six Money Mistakes of the Newly Partnered
By Erin Burt and Queercents
Four words no one wants to hear soon after they moved in together: “We made a mistake.”
We’re talking about your financial choices — not your choice of a partner. Unfortunately, many newly partnered gays and lesbians set themselves up for failure soon after they say “Let’s move in together.” If you bring bad money habits to the partnership or fail to come up with a plan to merge your financial lives, you could potentially doom your relationship to money trouble — and endless arguments. Not exactly “happily ever after.”
However, nothing says “I love you” like the desire to start your partnership on the right financial foot (roses, schmoses). We’ve identified six pitfalls that commonly trip up new partners. Steer clear of these, and you’ll decrease the money tension and increase the harmony in your new life together.
1. Keeping money secrets
Money is one of the most common sources of arguments in a partnership, so it’s best to simply avoid the subject altogether, right?
Wrong! Some of the most heated arguments may stem from partners failing to discuss their financial backgrounds, expectations and attitudes from the start. Communication is key to the survival of any relationship, and bearing your financial soul to your partner is no exception.
Ideally, you want to have this conversation before the U-Haul arrives. After all, there are good new love surprises (“Didn’t I tell you I’m a gourmet chef?”) and bad surprises (“Didn’t I tell you I have $20,000 in credit card debt?”). Full disclosure is in order here — that includes your shoe fettish or gambling habit. For tips on what to discuss, see Ten Questions to Ask.
2. Not having a budget
Now that you’re settling into your new life together, it’s time to discuss the b-word — budgeting. You’re merging two spending habits and two saving habits into one household. So even if you had a budget when you were single (pat on the back), you’ve got to make a new one with your partner to include his or her income, debts and monthly expenses. This will help to ensure you have enough money left over to stay out of the d-word — debt.
Use our budget worksheet to help. Your first step is to write down your fixed expenses — such as your rent, car payment, insurance premiums and student loan payment. You should also make a habit of contributing to your savings or investments as if it were a fixed bill each month. Then write down your flexible expenses, such as utility and phone bills, transportation costs, groceries, trips to the ATM and miscellaneous purchases. Track your actual spending for a couple of months to see where your money really goes, find the spending leaks and plug them. Building a budget is a great way to set common spending and saving goals, identify problems and work together to fix them.
3. Giving one person the financial reins
Love’s initial bliss is over, and it’s time to get down to the nitty-gritty of the daily finances. Who will physically pay the bills, monitor the investments and crunch the taxes? One person may be more inclined toward these tasks, or you may decide to split the responsibility or trade off each month.
There’s nothing wrong with letting one person take over the household finances, as long as both partners are OK with that decision. But that doesn’t mean the other partner should be excluded. It’s important for each person to feel involved in not only the big financial decisions, but also to have an understanding of the day-to-day finances. You each need to know all your different account information, passwords and bill due dates in case anything were to happen to the other person. And no matter how you divide the responsibility, it’s a good idea to have a regular “money date” each month or so to make sure each of you is in the loop. You should go over your budget, review your savings progress and discuss upcoming expenses together. How’s that for keeping the romance alive?
Also, if you choose to combine your finances after you move in together, make sure that major purchases and savings accounts are held in both of your names so each of you has equal access and can maintain a credit rating. You don’t want to find out in the event of a split that your name wasn’t actually on the car title or savings accounts.
4. Dragging debt into the partnership
Whether you decide to combine your finances or maintain a separate approach, if one of you brought debt into the partnership, it becomes a problem for both of you. You’ll need to work together to come up with a plan to pay it off. However, you should never officially co-mingle your debt. Doing so could hurt the credit score of the other partner and make it difficult for one or both of you to get credit later. Keep existing credit card and loan accounts in the original holder’s name.
If you can help it, it’s best to avoid beginning your partnership in the red. Many newly partnered gays and lesbians make the mistake of going too far into debt to buy brand new furniture and appliances for their home. Before you dig too deep, you should sit down together and determine what expenses are necessary and which are worth a splurge — and come up with a plan to pay for it all before you spend it.
5. Sweating the small stuff
Partnering is about compromises and simply letting some things slide. So he squeezes the toothpaste tube from the middle and doesn’t pick up his socks. Big deal. You’ll soon learn to pick your battles and save your energy for issues that really matter.
That goes for picking your money battles too. I remember my first financial argument with my partner. We had been living together for two weeks, and we were doing our grocery shopping together. She wanted to buy the name-brand chocolate chips, and I felt strongly that we save 75 cents and go with the off-brand. After a lengthy and heated exchange, we divided up the rest of the shopping list so we didn’t have to look at each other for the rest of our outing and then drove home in a huff. Lesson learned: Never go grocery shopping when you’re hungry, tired and irritable. Oh wait. Financial lesson learned: Don’t sweat the small stuff. Was the argument really worth 75 cents? No way.
Of course, if all the little stuff is adding up to a big drain on your finances and causing you to live beyond your means, bring it up at your next money date and work together to find ways you can both cut back. (Ah, there’s that whole compromise idea again.) But take note: It’s important that you build a little “mad money” into your budget for each partner to spend at their own discretion. Can you imagine asking your partner for permission every time you wanted to buy a cappuccino and a muffin or grab a drink with some friends after work? But as far as the big stuff goes, make it a rule to consult the other on major purchases. You don’t want to come home and unexpectedly find a brand new Mercedes in the driveway, and the bill that goes with it.
By the way, I now go grocery shopping alone. We decided as a couple it’s what’s best for our partnership.
6. Failing to plan for an emergency
No one likes to think about bad things happening, but in all the excitement of your fresh love and moving in together, it’s easy to overlook this important aspect of financial planning. One of the best gifts you and your partner can give each other is financial security and protection from life’s storms.
First, assess your emergency stash of cash. Every couple should have enough money available to cover three- to six-months worth of living expenses. You never know when the car will break down, one of you will lose a job or you’ll have an unexpected medical bill. Learn more about how to build your financial foundation and where to keep the money.
Then, you need to make sure you have adequate insurance coverage, including health, auto, renters or homeowners, and possibly life insurance. Learn more about the types of insurance everyone should have, and how to get the appropriate coverage.
Did you move in together without a cohabitation agreement? It’s not too late to protect the financial interests each partner brought to the relationship. Consider drafting an agreement with your lawyers. Plus, make sure you each have written a will to divide your assets in the event of your death.