24 Signs That You Could be in Financial Trouble #13: Failing to Participate in Family Financial Decisions
In this series I am covering the 24 tell-tale signs that you could be in financial trouble. Over the next few weeks I will be presenting these signs, how to identify them and tips on how to address the issue.
Previously I discussed how fighting about money can not only be harmful to a marriage but how this can lead to financial trouble as well. Today is an extension of that topic and it has to do when one person in the relationship doesn’t fully participate in the family finances. When you are married or dealing with shared finances both parties need to take an active role in dealing with the family’s finances. It is not fair to place the entire responsibility on one person’s shoulders and this extra burden is sure to leave to arguments.
Start With Simple Tasks
It is common for one person in the relationship to handle the checkbook or to monitor daily balances. Whether it is because this person is better with numbers or has more time to keep up with the task, when only one party is privy to this information it can quickly lead to a disagreement. Begin by making sure both people are on the same page with day-to-day finances. This doesn’t mean both people need to sit down and work out the checkbook or enter data into financial software together, but both parties do need to have regular access to this information so they are on the same page.
Tackling the Big Purchases
While it isn’t likely that in a marriage one person will go out and buy a car or a boat without first consulting their spouse, these larger purchases are still an area for added stress in a relationship even if they are openly discussed. Again the problem comes when one person isn’t fully aware of the financial situation. If one person handles most of the budgeting and day-to-day finance issues they are fully aware of their family’s situation. But what happens is the spouse that is not as involved in this aspect of the finances will have a false sense of what they can or can’t afford.
When deciding upon a large purchase it is crucial to take some time to make sure everybody is on the same page. If you need to, sit down and go over the budget item by item, clarify the current balances in all of your accounts and understand what bills or expenses will be coming out. With both parties in agreement on the true state of their finances they can go into making a large purchase without unexpected assumptions. There is no quicker way to an argument when one person thinks they can afford a $30,000 vehicle while the other knows they can realistically only afford a $20,000 vehicle.
Hold Regular Meetings
Think of your family finances like a business and hold regular meetings. You don’t need to set aside hours of time or put together fancy reports to have a successful meeting. All it takes is spending a few minutes a week together to make sure everyone is aware of what is going on. Make it a point to spend at least a little time once a week going over the immediate financial issues and then try to have a monthly time set aside to review longer term issues.
You’ve been there before. How does it feel when your spouse springs something up on you at the last minute? For example have you ever had a situation where your spouse tells you about a birthday or baby shower gift that needs to be purchased tomorrow for the event this weekend? Nobody likes surprises when it comes to spending money that wasn’t budgeted. A quick talk once a week will identify these types of expenditures before they become a surprise and will not only allow you to budget better but probably keep you from sleeping on the couch over a $50 argument.
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About the Author: Jeremy Vohwinkle is a Chartered Retirement Planning Counselor® and spent a few years working as a financial planner. Today, he helps people make the most of their money by writing about personal finance here and elsewhere on the web. Jeremy is also Coach at Adaptu and a regular contributor for other publications such as Intuit, and American Express. Be sure to follow Jeremy on Twitter or Google+.