Canadian consumer debt has hit a new high of 1.4 Trillion. With so many Canadians indebted it is no surprise that couples share debt as well as sentiment and commitment.
A recent poll was conducted by a bankruptcy trustee firm that showed 47 per cent of respondents aged between 25 and 34 years old brought debt into their relationship, while those in the 45-to-54 age group started off with the highest level of debt of all at an average of $19,488 per partner.
It is a shame that a couple’s fresh start at a life together is burdened by debt. It makes it difficult to move forward together in buying a home and starting a family.
Having debt is an issue but dealing with it as a couple is a common source of struggle. If one partner is managing finances, the other needs to be on the same page, so to speak, with a financial plan. If one partner continually mismanages funds it will not only hurt the couples’ joint finances, but it may jeopardise their future financial plans by ruining their credit history. This will most certainly lead to tension until both partners show a commitment to a joint financial plan.
The survey also showed that 36 per cent of respondents said they did not discuss their debts with their spouse prior to getting married. Such a lack of communication can hurt the couple’s chances of survival from the starting gate. It is essential to sit down together and make a plan to resolve any debt as a team. If that means one person manages the budget while the other manages the bill payments so be it. When a couple is discussing roles for managing their money, it is important to have an open mind and not to make decisions on who is the larger income earner. A partner who brings in more income may have a tendency to feel more important and believe they are entitled to make the decisions. This kind of thinking will only lead to tension and resentment within the couple. If one partner is good at organizing and volunteers to manage the finances, while the other agrees to such a set up, this could work provided both partners are fully informed of all decisions.
On the flip side 61 per cent of respondents said they had paid off their debt prior to marriage, and 46 per cent said they added new debt after marriage.
Whether you are preparing for marriage or are newly married, these tips can help couples be successful in managing joint finances:
• Make money decisions together, as a couple. Whatever the arrangement you decide to make in terms of how you will share in paying the bills, both of you should be aware of each other’s income, investments, debts and “wish lists”. Wish lists are the items you would like to purchase whether they are vacations, renovation ideas or retail items. This way you are kept in the know.
• Be truthful about your spending and saving habits. It’s not romantic to discuss how each of you spend or save your money, but it may avoid painful confessions and arguments if you have an open discussion about it. By being honest, you can grow together as a couple and not be burdened later on emotionally and financially by surprise debts and costly spending habits.
• Be aware of each other’s income and devise a household budget together. In order to build a household budget together, it’s important to know exactly how much each of you earns in income. Include your combined expenses on the budget and agree on your financial priorities. You’ll be on the right track in maintaining a strong financial back bone by being honest and sticking to your budget.
• Keep separate credit cards. Decide together the spending on each other’s credit cards and keep them clear of debt. It’s your choice if you want to keep separate bank accounts or open a joint bank account. It is recommended if you do keep separate bank accounts that each partner should have access to both to help with paying combined household bills. It is important to share in the responsibility of financial stability.
Marriage should be a partnership in all aspects and managing finances is no exception. It can be a couple’s greatest source of strength or demise. How is your financial arrangement in your relationship?
For more about marrying debt see: Don’t Marry Debt – Know you’re Partner’s spending Habits from the Start
.
Recent Comments