Wednesday, September 12, 2012

Money Mistakes You Should Avoid

Money can cause a lot of trouble. It's a fact we couldn't avoid if it is being mishandled. There are some problems you might want to know and how you could be able to handle and manage if those problems arise.

1. Avoiding Discussion of Finances Particularly if You Are Married/Couple.
It's kinda tough to meet your financial goals without discussing and sharing them with your partner. If you have trouble talking about money together, it might help to start with the 5 W's.
Here they are:
What you owe
What you own
What you earn
What you spend monthly
What is your credit score
They are essential pieces of financial information you can use together.
Then, you should focus discussing your goals together as a couple, write your goals and seek each other's advice if there are some things you need to buy, like a pair of shoes, etc. Common mistake a woman does is trying to force their mate to do what she thinks is best.

2. Ignoring Each Other's Money Styles.
If you have different financial habits, know your own money personalities. There is the saver, the spender, the risk taker, the security seeker and the flier. It might be wise to give each personality an outlet. For instance, give the spender some extra amount for impulse purchases, but make sure the bank account should never go below a particular amount to make the security seeker feel better ;). Another thing, it is important to focus on where you agree both.

3. You Play The Blame Game. Blaming each other is very toxic in a relationship. Take problems and solve them as a team. Don't attempt to sidestep a tough discussion by cleaning up a spouse's mistakes. Work together to create real solutions, instead.

4. Having Two Money Lives. Be upfront about having a separate stash. There are cases that all adults should have money to spend without having to account for it. Before you plan of getting married, it helps to discuss pre-relationship obligations. For instance, if the children's father is not paying support what the future groom thinks he should, that can spark a future misunderstanding that can build up. Likewise, if the guy squirrels away child support money for their education, that should be discussed as well.
Learn to identify your fears as well. For instance, some hide money out of poverty fear, while some don't trust their spouse that he will always provide. Make a point to seek help from a therapist to help you resolve it.

5. Using Money As A Weapon. Sometimes, earnings disparities can spoil the relationship as well. So, think of his, hers and our money! If one earns more, contribute proportionately to the shared expenses and consider adjustments such as having the person with higher income contribute for retirement. Also, aside from a shared bank accounts, try to maintain separate accounts for individual goals.

6. Pooling Assets Too Early. If you are still not married, and you feel you need to protect your assets, create a domestic partnership agreement. It is a contract between you and your partner which includes instructions on who will handle bills, whether a property will be jointly owned or belong to one partner, and an outline of joint assets.
Consider a prenup. It can protect couples from debt amassed before marriage. For instance, a woman should consider one if she owns a home or accounts or has kids from previous relationship, to protect her assets and the children's inheritance.