The f-word. Finances. Combining love and money may be the biggest
stumbling block on the path of true love, creating more rifts in
relationships than in-laws, drug and alcohol addiction, or infidelity.
Financial
power struggles challenge even the most solid partnership.
Unfortunately, money too often equates to control in a relationship. The
delicate balance of power between you is dependent on the successful
combination of love and money.
In the majority of relationships
today, both members contribute financial resources. Despite the strides
women have made toward financial equality on the job, though, men still
have greater earning power. In general, with more disposable income, men
invest more money and take greater risks than women. Women as a whole
are more conservative in their investments because it takes them longer
to earn the money. Money attitudes are also influenced by age, family
upbringing, religion, and each person's own unique financial trials and
errors.
Everyone has opened a bank account, paid the rent or
mortgage, kept the telephone and electricity turned on. When you make
the decision to share your life with someone, though, such mundane
issues suddenly become complicated.
Do you keep separate bank
accounts or do you put all the money in one account? How do you split
monthly expenses? Do you each pay a portion or do you pay bills out of a
joint account? Should you be able to sign on your partner's bank
account? Did one of you bring assets to the relationship that the other
uses, such as a car or a home, for which expenses should be shared?
Financial
advice for couples over fifty varies significantly depending on age,
economic status and dependents. Every situation is different, but the
following is general advice for everyone.
Many modern couples keep
their finances separate, while others opt to pool all their funds.
Making the decision on the day-to-day handling of what was formerly
"his" and "her" money can be a tough one.
There are benefits to
keeping separate property funds separate and maintaining certain assets
in one name only, which we'll explain in more detail in the next
chapter. Keeping other monies separate may create logistical problems,
though, along with a diminished sense of common goals for the future.
Combining your funds also gives a couple greater borrowing and
investment power.
Determining a financial plan that works might
take months; many couples struggle for years before reaching a balance.
Defining and discussing your money styles is the first step, setting
goals is the second.
Review your financial picture. Are you both
satisfied with your knowledge and control of "your" money and "our"
money? Are you both knowledgeable about banking, insurance, investments,
credit cards?
The routine business of a new life together should include the following:
- Reevaluation of life, health, auto and other insurance coverage
- A change of beneficiary on insurance policies and company pension plans
- Notification to social security of your marriage to ensure eligibility for your spouse's benefits and change of W-4 withholding
- An assessment of the impact of remarriage on alimony or pension/retirement benefits from a prior marriage
- A consultation with an accountant to learn the impact your marital status will have on your federal or state income tax obligations
- In a remarriage, be aware that the income of a new spouse may impact eligibility for financial aid of college-age children from a prior marriage.
