Sunday, August 18, 2013

Money in a relationship: Common mistakes to avoid



Chapter 9. Common Mistakes to Avoid
You only have to do a very few things right in your life so long as you don’t do too many things wrong.— Warren Buffett

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The worst thing to happen in your financial relationship is financial infidelity. If one partner cheats by hiding some important information, it’s a dangerous threat to the atmosphere of trust and respect. The ways to deal with it are very delicate. 

The following is a bad way to deal with this situation: “My wife went shopping and bought new dresses and handbags out of the family debit card. We agreed that purchases like that should come out of our personal accounts. But since she broke our agreement, I will charge an Xbox and a couple of games on our family debit card.” Stop!

Sliding downward into a spending spiral burns down your home finance system. Never take revenge by reacting to partner’s financial misconduct through unplanned purchases. Remember that home finance—and your relationship—is not about one-upmanship. It’s about creating a harmonious financial situation for your family.

First of all, there are different levels of misconduct. Buying a new dress is completely different from draining the emergency fund on a trip to Las Vegas. Try to understand the underlying reasons instead of blaming. Discuss how your feelings were hurt, plus forgive minor wrongdoings. Doing exactly the same (financial misconduct) might give you some temporary satisfaction, but it will definitely be a setback for your relationship.

As for major misconduct, such as gambling or shopaholism, I doubt you can solve the problem by yourself. The thing to do is to get a third party to help. It could either be a trusted friend, family counselor or a therapist, depending on the situation. There are some things that we can’t handle on our own, and that’s when a professional’s help is needed.

Compared to financial infidelity, all small family fights over priorities of goals and spending allocation are a normal course of any relationship. What’s important is that you talk everything out and find a common ground. You’re lucky if you and your partner have the same thoughts about everything, but that’s an exception rather than the rule. It’s not really about finances that you are dealing with, but values. 

Exercise 9.2. If you are having difficulties in agreeing over goals and priorities, please re-read Chapter 3. Values to Understand and the Right Ways to Talk About Money with Your Loved One together with your partner.
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