Being in a relationship is all about compromise, and many couples make sacrifices for each other. But this doesn't mean you have to gamble with your personal finances. There's an old saying that love is blind. And while this saying might refer to being unable to see a person's character flaws, being in love can also make you lose your financial focus. Financially speaking, your partner can either help or harm your money. Here are seven things to avoid when in love.
1. Cosigning a Loan for Your Significant Other
If you're married, cosigning a loan isn't the end of the world, especially if you're okay paying the debt if your spouse can't. But if you're dating, cosigning can be extremely dangerous. You might be happy today, but there's no guarantee the relationship will last until the loan is paid off.
2. Ignoring Warning Signs
Your partner isn't perfect, so he or she might have a few flaws or skeletons in the closet. Don't ignore financial warning signs. For example, if your partner earns decent money but is always broke, or if there's several clothes in his closet with the price tags still attached, consider whether he has a spending problem. The truth will come out sooner or later, and it's better to know what you're getting into early.
3. Not Asking about Credit History
If you're getting married or thinking about cohabitation, you need to ask about your partner's credit history. This person's credit score can play a role in whether you're able to buy a house, get a car, etc. Nobody is saying his credit has to be perfect, but if it's terrible, get to the root of the problem and make sure there's a plan to improve his rating.
4. Hiding Your Financial Trouble
Not only should your partner come clean about his financial skeletons, you should do the same. A relationship is built on trust. It doesn't matter if you're embarrassed or in denial, you have to come to grips with your own financial issues and share these with your partner. This way, there are no surprises and you can work as a team to improve the situation.
5. Joining Bank Accounts Too Soon
It's common for some married couples to have a joint bank account, but I'm often surprised by the number of dating couples who merge finances. Sure, you trust this person, but at the end of the day, you're not married. If you want to have a joint account for household expenses, go for it. But keep your personal money separate.
6. Emptying Your Bank Account for Her
If your boyfriend or girlfriend comes to you with a problem and needs a lot of money, think twice before emptying your bank account. It all goes back to the fact that you're not married. Couples break up, and if the relationship ends, there's a chance you may never see a dime of this loan. Not saying you shouldn't offer financial help, just make sure it's an amount you can afford to lose.
7. Giving up All Financial Control
I've known situations where one partner handles all the money in the relationship and the other's in the dark. If you were financially independent managing your money before you got into this relationship, you should continue to have a part in managing the household finances. This way, both of you remain on the same page and have a clear understanding of what's coming in and what's going out.
Love might be blind, but you don't have to lose your financial focus. What are other money tips you can offer couples in love?