Relationships of all kinds are complicated. Whether it’s your relationship with your spouse, boyfriend or girlfriend, kids, parents, boss, colleagues, or friends, relationships are even more complex when it comes to money.
These ten things are what every woman needs to know about relationships and money.
Things to Know About Relationships and Money
Make sure you aren’t caught off-guard when it comes to money and relationships. Here are some things you need to know to maintain your own financial wellness while safeguarding your relationships.
1. Don’t Rely on Your Spouse
I hope that you can count on your spouse to support you in sickness and health for your entire life. For many people, even with divorce rates at historic highs, there is still a good chance you can count on them.
But you shouldn’t rely on them. Have your own set of skills to earn a living and set up a safety net so that you will be ok if something happens.
2. Don’t Rely on Your Parents for an Inheritance
If you happen to be lucky enough to have parents who have done better than you financially, no matter what, do not rely on an inheritance from them.
I have seen many situations where older people change their minds and their wills or trusts in their last years of life. Hope that your parents spend their money on enjoying their retirement or leaving it to worthy causes.
If you get an inheritance, let it be a nice windfall, but never count on it.
3. Don’t Rely on Your Kids to Support You
Just like you shouldn’t count on your parents, don’t count on your children either. Even if your kids do extremely well financially, you want to be your own independent person.
4. Ensure Anyone You Do Rely on Has Life Insurance with YOU as the Beneficiary
There might be some situations where you currently rely on someone for their income. Women are much more likely to stay home with kids than men are.
If you do rely on someone else for money, still remember to build your own skills. However, this tip is about building an actual safety net that you can fall back on if needed.
Ensure that they have life insurance set up with you as the beneficiary. You can even possibly buy a policy on their life. While this tends to be a bit more expensive, it ensures they can’t remove you as the beneficiary.
If you currently rely on someone and they don’t have life insurance with you as the beneficiary, get insurance set up as soon as possible.
5. Don’t Loan Money You Can’t Afford to Lose
Another big pitfall with relationships besides overreliance on people you love for financial support is loaning money to friends or family members.
I don’t care how much you trust/love/support the person you are giving a loan to, don’t ever loan money to someone that you can’t afford to lose.
6. Ideally, Never Loan Money at All – Either Invest It or Gift It
Better yet, don’t ever loan money at all. Think of your loan as an investment or a gift.
If you think of the loan as a gift, you won’t expect to get it back. If you treat it as a risky investment (which you can still afford to lose), then maybe someday you will get your money back, plus some additional interest or capital.
An investment option is truly best if the person you are giving the loan to is starting a business. Talk to the person about it and tell them it’s an investment. The psychological impact of getting an investment is greater for them than receiving a loan.
7. Set up Separate Bank Accounts So You Have a Savings Fund
One of the biggest debates about relationships in personal finance is whether to have a joint account, separate bank accounts or even both.
I do think in a relationship, each person should have their own bank account, even if you only keep $50 or $100 in it. That way, you have it if you need it, and it can be very nice to use for personal spending.
This is how my spouse and I kept our funds for many years. We each had a budget of personal spending money that was put in our individual accounts each month, and we could use it however we wanted.
This is a nice compromise when you are on a tight budget or if your spouse controls your spending more than you’d like.
For a counterpoint, here are seven reasons shared accounts are better.
8. Know What You Would Do if Someone You Rely on Gets Ill, Leaves, or Dies
You don’t need to have a detailed plan in writing, but you should have a basic answer to the question: what would you do with your bank accounts if someone you are relying on for income got seriously ill, died or left you suddenly?
Do you even know which banks your money is kept in and how to access it? Do you know approximately how much money is there and available for daily spending? Do you know where you could transfer emergency savings from?
If you don’t control the bank accounts currently in your relationship, at least be able to answer these questions.
9. Value Your Relationships and What they Provide or Teach You About Money
Every one of your relationships likely either provides you with something or teaches you something about money. Ensure that you are grateful for whatever this is.
10. Read More about Relationships and Money
Several years ago, we ran an in-depth series about relationships and money with some of the best writers from around the web.
Check out these posts about how divorce affects your money, along with more about relationships and money.
The Bottom Line
To have a healthy relationship, you need to be able to talk about money. You also need to have confidence in your own money.
What else does every woman need to know about relationships and money?