I’m a romantic. I love love.
But I hate debt.
It destroys lives and destroys relationships.
And the harsh reality is that financial stress, not infidelity, is the number one reason marriages fail.
The statistics are staggering. Half of all marriages now end in divorce and almost four in ten people cite money problems as the cause.
So if you’re considering marriage or even if you’re already in a loving union, here are my top five tips for safely navigating your financial love life (without souring the mood).
Shark Tank star Kevin O’Leary (pictured with wife Linda) insists he’s a ‘romantic’
ON THE THIRD DATE AND THE THIRD GLASS… Talk about money
By the time people reach their mid-twenties, most have already built up a substantial financial history.
Don’t assume it’s a good one.
You need to talk about money while you’re looking for Mr. or Mrs. Right – and this is a perfect time to ask this question.
Couples only make it to a third date if there is mutual interest – that’s when you can do a little financial due diligence under the warm glow of romance.
Go out for a nice meal. Share a good bottle of wine. And two and a half glasses say, ‘Look, I’d like to ask you a few questions, because I’m very interested in you.’
“Have you ever been bankrupt?”
“How much credit card debt do you have?”
“How much do you have in savings?”
O’Leary says a pre-nup is “the path to marital success.”
Don’t be afraid to dig. You want to know if there is a problem.
You’ll probably get one of two answers: “Yes, I’m financially responsible” or “How dare you ask me that!”
If someone gets defensive, say, “There’s no need to be offended. I’m interested in you and I want to help.’
But if your date still refuses to discuss their financial situation, that’s a flashing red warning sign. I wouldn’t want a fourth dinner.
Ask yourself: Would you want to hitch your car to a partner who is in financial trouble and is irresponsible with money?
I would not do it.
Moreover, this conversation sets the tone for the relationship and makes it easier to have even more serious conversations…
The statistics are staggering. Half of all marriages now end in divorce and almost four in ten people cite money problems as the cause. Pictured: O’Leary with his 34-year-old wife Linda
THE POST-PROPOSAL PRENUP
Start the marriage off on the right foot by discussing what will happen in the event of a divorce.
That may seem counterintuitive.
But that is not it. By being financially aligned, couples can relieve themselves of toxic anxiety.
I have invested in prenuptial agreement companies not only because it is a recession-proof business, but because prenuptial agreements are the first step toward a successful contractual relationship.
A prenuptial agreement forces each person to disclose their net worth, assets, and debts and how those assets would be divided in the event of a split. Even if you do not marry and live with a partner, a prenuptial agreement is essential.
If one day your partner walks out the door, you’ll have one less thing to worry about. You have your bank account and investments.
Divorce is always difficult, but at least you won’t be penniless.
A prenup is a stress remover and a marriage stabilizer.
No, it’s not romantic. But it’s an essential part of maintaining your financial identity – something you should do for the entire duration of your marriage.
LOVE TOGETHER, Spend SEPARATELY
I don’t care if you are a newlywed couple or grandparents in retirement, it is imperative that you never completely give up your financial identity.
This is my number one tip.
You can have one joint account for the mortgage on your home, raising your children and everyday expenses, but always maintain separate bank accounts, credit cards and investments.
There are no benefits to combining individual stock and bond holdings. Keep your own advisor and make your own regular deposits.
I’ve never heard of anyone giving their partner control over their inheritance, why would you give up your savings?
There is no advantage to that; only the opposite is true.
Most divorces occur between three and seven years of marriage.
Maintaining financial independence protects you.
Only 4 percent of marriages fail after ten years – so over time this rule may relax. But don’t hesitate in those early years!
And there’s a good way to know that your partner can be trusted with the family nest egg…
O’Leary (pictured center with his Shark Tank co-stars) says couples should only have three credit cards
CREDIT CARD THROUPLES
A married couple is allowed to have only three credit cards: one for each partner and one shared card with a maximum limit of $2,500.
The joint card can be used for shared expenses such as monthly subscriptions, household expenses and entertainment. This card should also have a maximum limit as it is the most used and therefore most likely to be hacked.
And above all, any card balance must be paid off every month.
Not only is this the way to build good credit, allowing couples to take out loans at reasonable rates – it also helps maintain financial independence.
Regularly paying off a credit card in your name will preserve your credit score.
The rating agencies that calculate credit scores don’t care how much you pay off each month.
They just want to see that you have no debt.
And if your spouse ends up with a zero balance every month, you know you have a responsible partner in the marital affairs.
BONUS TIP: GIFT, NOT BORROW!
Family conflict is another potential burden on a marriage – so avoid it where possible!
I never lend money to family members because the situation often ends badly.
There will always be a cousin, aunt or uncle who needs the money for their latest investment or business venture.
But no investment is guaranteed, and eight in ten startups fail, so you should never expect to get anything back.
Broken promises breed resentment.
For this reason I do not borrow.
I gift. And only if the recipient understands that by taking my money, he is giving up his right to ever ask me for a gift again.
Family and marriage are too important to be destroyed by money.
Follow these tips and take that consideration out of the equation.