B.L.A.C. READER: As an engaged couple, should both of us be responsible for helping family members financially? Doing so takes focus away from our own goals.
BRIDGFORTH: At some point or another, every couple, married or engaged, is likely faced with a request from relatives or friends wanting financial assistance. In today's turbulent economic environment, it is best to have a guideline established in advance to ensure financial harmony in your relationship.
First, based on experience, maturity and just being old school, I would suggest engaged couples not comingle their finances. Since you are not legally married, stay as financially independent as possible to preserve your creditworthiness in the unlikely event of a break-up before you jump the broom.
Next, as you plan for life together, make sure as a couple that your needs and wants are the highest priority. Financial responsibility ultimately lies with you and as challenging as it is, you and your partner should strive to be on one accord with all monetary decisions. Here is a strategy from my book "Girl, Get Your Money Straight!" called "The 4 Cs of Couples and Money" which can help with starting a healthy dialogue:
Clarity: Before commingling finances and addressing joint household needs, each individual must be very clear about where he or she stands financially on a personal level. What do you own? What do you owe? Is your checkbook balanced? What does your credit report look like? What are your saving habits? What are your attitudes and values about money? What are your financial goals?
Communication: In any successful relationship, good communication is key. Are you willing to discuss openly and honestly the above financial questions without criticism, anger or judgment? Are you willing to take the time and energy to plan, track and analyze your family's finances?
Compromise: Once the necessary issues are brought to the table, each person needs to feel he or she contributed to the discussion and must buy into the decision. Are you willing to eliminate stubborn pride and give a little and take a little in order to create a win-win financial situation?
Commitment: There must be a commitment from each party to make a financial plan work. Each person must be open and honest with respect to his or her concerns, fears and feelings. Are you willing to commit to the relationship, work together and commit to the process of joint management of finances?
Once these issues have been discussed and agreed upon, then you can move to the next level. You and your partner should agree on these practical principles before considering helping others financially:
- Bills will always be paid on time.
- Debt will be kept to a minimum.
- You will strive to save six months to one year's worth of living expenses as a savings cushion in case of emergency.
- You will fully fund your retirement accounts annually.
Once these agreements have been made, it may be okay to help someone in need in an emergency situation. For example, someone is in danger of being evicted or having utilities shut off in the middle of winter. These are very different scenarios than someone asking for help because he or she cannot pay a cable or cell phone bill.
More importantly, know that even if your financial assistance is classified as a loan, it might end up being a gift that is never repaid. Can you and your mate accept that circumstance?
For many people, mismanaging money is a pattern. If you agree to assist once, they might make a habit of coming to you for more. Don't become a crutch or an enabler. If a loved one's rent money is always short, perhaps that person should move to a lower cost apartment or rent a room.
If you have goals and objectives as a couple, you should keep them in writing and visible as a reminder before considering any request for financial assistance. Also, I suggest you practice saying no without feeling guilty or having to explain and justify your answer. Simply say, "I'm sorry, that financial request is not going to work for us."
As another option, you and your partner can set aside a specific amount of money in a reserve account for family emergencies. Again, this is after your own savings reserve has been established.
Remember, whatever you do, do it together.
GLINDA BRIDGFORTH IS THE AUTHOR OF "GIRL, GET YOUR CREDIT STRAIGHT!" AND FOUNDER OF BRIDGFORTH FINANCIAL AND ASSOCIATES, LLC.