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When it comes to discussing issues revolving around money with parents or partners, the conversation can get awkward, or even aggressive, quickly. As a result, many people try to avoid bringing up money matters as much as possible. This is the wrong approach. Money inherently carries with it numerous consequences, and outlining those consequences and the responsibilities involved is important to insuring financial stability.
Talking about money with your family:
Talking to your parents about their debt and assets, in regard to their passing, will probably feel uncomfortable. You don’t want to acknowledge their death, or seem greedy by talking about the money they may or may not leave you. But when they die you will most likely be the one settling all their loose ends. Set up a time with them to meet about this specific topic. Let them know that this is why you want to see them, and give them time to collect all the necessary paperwork to go over it with you. Take notes, and even turn it into a document, so that when the unfortunate time comes you will already have the steps outlined, and can keep a clear head about one aspect of an otherwise hard time.
When my grandmother recently died, she had multiple accounts over numerous institutions, not to mention bills, housing payments and other financial obligations. Since my mother had already gone over all the finances with her, including having a joint account with my grandmother to be able to resolve all these financial obligations once she passed, it was one less headache for her during the grieving process. Although you will never be responsible for a parent’s debt, it is important to know where all the money will be going.
With your partner:
Going over finances with a partner or setting up restrictions or budgets can be one of the most difficult things in a relationship. In fact, it can even be the thing that ends a relationship. Despite this, it is necessary to traverse this monetary minefield so that the two of you don’t fall into debt. This is made especially clear when you look at credit card default statistics over the past few years. If you are living with your partner, and it’s clear that this will continue to be the arrangement, it may be a smart idea to open a joint checking account. However, I am not suggesting that both of you start dumping all of your funds into this account. Instead, add up all the bills and expenses that the two of you share, once you have that dollar amount, agree on an amount that both of you can contribute to that shared account on a weekly or monthly basis. Designate one of you to pay all the bills as well, so that you don’t end up double paying either.
By putting only the necessary equal funds into a shared account you avoid two things. First, one of you won’t have to come after the other for money that’s owed—that’s a recipe for an argument each month. Second, you are both putting in the same amount and only using it for communal needs, so you can avoid arguments about one person not contributing enough, or spending on frivolous items that the other person won’t be using.
This mentality should span all other financial obligations that the two of you share. Things like credit cards for personal expenses and other singularly personal needs should be kept separate. If the two of you decide to get a joint credit card, it should again only be used for communal needs and should only be paid down from the money in your joint account (extra weekly or monthly funds will most likely need to be added). There may be small arguments about an unnecessary expense at one point or another, but by sticking to this plan there will most likely be few and not such a situation that will cause a financial meltdown within the partnership.
Talking about money in the personal sphere is definitely not easy, but money is all about business. There’s no other reason for it. As such, treat every interaction—even personal relationships—as a business transaction when it comes to finances. Making it clear that the discussion is solely about finances—and not about anything personal—should make it a little easier. Writing down everything that was said and agreed upon, and given to the people involved will insure that everyone is on the same page and can handle a minor hiccup should it arise.
Author Bio: Michael Pope is a personal finance blogger for NerdWallet.com, a site dedicated to promoting financial literacy and helping people answer real-life questions such as “How do I start paying down my debt?” and “What should I do as part of my retirement planning?”