Five Tips to Mixing Money and Relationships
It’s hard enough trying to find someone you like and can live with domestically, let alone having to contend with the dirty business of money. Spending and saving habits vary from person to person so before you tie the knot — formally or informally — sit down and figure out how to marry spending and saving in a fashion that will not disrupt the flow of your relationship, your household, or your cash.
Hash out the cash flow
Most couples create a household account that both partners contribute to as well as manage. Discuss: Should you both contribute equally to the household expenses, regardless of your income? Or, if one person significantly out-earns the other, should you pay a percentage of your paycheque, based on your percentage of the income?
But that’s personal
Next, you’ll need to talk about what constitutes a household expense vs a personal expense. For example – a weekly delivery of fresh flowers to the home is nice, but is it a household expense or a personal indulgence? A lawn maintenance service is a household expense, but is it so that one partner can play golf instead of mow the lawn while the other is inside cleaning toilets and scrubbing the oven?
Together but separate
Regardless of which expenses you decide to fund jointly, each partner should also have a separate account and the freedom to spend on whatever they wish. A shoe fetish should not have to be explained, nor should a magazine subscription or pursuit of a hobby. As long as both partners agree that the household expenses are fair and just, the rest is a cakewalk.
Discuss major purchases before you bring home the surprise
There will be major purchases both for the house and for personal use. Before you drop the cash for that big screen tv instead of the car repairs, talk it over. And while you’re at it, figure out whether it’s personal or for the household.
Create an entertainment account
Regardless of how you share the household expenses, you should also create an entertainment and vacation account. No one needs to argue that eating out on Friday – because you’re too pooped to cook – is a household expense in lieu of groceries rather than entertainment or a date.
Discussing your concerns about money can be awkward at first. Yet, in the long run it’s a wise investment for your money and your relationship.
Look Before You Lease – Car Leasing No-Nos
So you’ve seen that shiny new BMW that your friend has… and the TV ads that say you can drive it for only $500 a month. But it’s a lease. Should you? Or shouldn’t you?
Leasing can be an ideal choice for people with a limited monthly budget to purchase a brand new, fully warranted car instead of a used one. For the socially conscious, it can also help you to ‘upgrade’ your car to a more expensive one while keeping the payments equivalent to the purchase of a cheaper car.
To figure out exactly what a leased car is costing, you’ll need to add up the downpayment, lease payments, the market value of the car at the end of the contract and taxes. If you have to finance the car’s residual value at the end of the lease to buy it out, you’ll also need to include those loan costs in your tally.
Unless you’re participating in a special promotional offer for a specific model, leasing is generally more expensive than buying. But if you’ve still got your heart set on it, take note of these leasing NoNos:
Accept the advertised price. You can negotiate a car’s lease price, just as you can with a purchase price.
Don’t read the contract. Make sure you know exactly what you’re getting into before you sign a lease. Make sure you can answer these questions:
n Can buy the car during the lease period or at the end of it?
n Do you understand any clauses on theft or accident?.
n Are there limits on the number of kilometres you can drive each year and what the penalties are for exceeding the limit?
n Do you understand the residual value and who is responsible for any difference?
n Do you and the dealer see eye to eye on the definition of ‘normal wear and tear’.
Finally, a word of caution about cancellation. A lease is a contract and you cannot terminate it whenever you like. For more protection, you may want to have a sub-lease option included in your contract.
In the end, the decision to buy or lease comes down to a lifestyle choice. People who like to drive a new car every few years simply find a lease more appealing, because the individual payments are lower and they have no intention of keeping the car at the end of the lease. People who tend to keep a car longer than three years will likely be financially better off with a plain old purchase.