Happy Wednesday, everyone!
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How is the week treating you so far? Mine has been busy, but productive – and I must admit to being a little more than kind of excited about the weekend coming up, as my fiancé and I head to Vancouver on Saturday morning for a small “staycation” for his [age-redacted] birthday. Don’t you worry, though – through the wonder that is technology (#GenXY represent!), there are new posts all queued up for you to read while I’m gone. However, I digress. Today, I want to take some time to discuss money and relationships – namely, the mistakes I’ve made, and what’s working for my fiancé and I now.
Photo Credit: finerminds.com
The first time I ever had to consider joint finances was about five years ago, when I first moved in with two girlfriends of mine (I’d lived alone before; however, having room mates was completely foreign to me). It was a messy situation to begin with – we all needed to relocate within a really short time frame (less than three weeks), we had a limited budget, and only I had a full time job (the other two were in school, which was wholly financed by their parents. I was about 6 months out of school, working a full-time day job and a part-time evening/weekend gig as a bartender, and didn’t have parental financial support rolling in). I should have seen the red flags blazing then and there, but naivete and the desire to “be a good friend” were two driving forces that ultimately led to one of the biggest financial mistakes of my life.
When we did find a place that suited our needs and our budget ($1200/month, with utilities included), I footed the bill for the damage deposit and the first month of rent (by wiping out my savings account) under the pretence that I’d be reimbursed within the month. That never happened. Three months later, I’d made all the rent payments, bought the house groceries, and paid for our cable…with no reimbursement. When I finally manned up and confronted them about it, I was called a plethora of colourful names before losing two of my best friends…and I was still stuck with the bill.
Lesson #1: when it comes to friendships and money, if you must cross the two, put things in writing. There is no reason to lose friends over cash, regardless of the situation or the amount. True friends will respect you enough to be frank, fair, and honest about shared expenses or small loans – and before you move in with anyone, make sure to hash out the household finances. Who’s going to buy food? How are you divvying up rent? What is your contingency plan should one of you fall short? Considering these potential pitfalls prior to their occurrence will prevent a potential fallout in the future.
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So, following the fallout of the worst room mate situation I’ve ever dealt with, I went ahead and made the second of three major joint finance mistakes of my life. My ex-boyfriend and I decided that it would be a great idea to move in together (under the pretence of saving me some financial stress). Following a very stressful eight-week stay in his parents’ basement, we found a small apartment that suited us to a T, and for a few weeks, life was awesome. At that point in time, I was working for the government at an out-of-school childcare program and he was employed as a line cook at a local steakhouse. He bought groceries and paid for cable/heat/internet, and I paid rent/condo fees/gas money. Things were fair…
..until he lost his job (and didn’t even try to find another one), and creditors came knocking down the door (they wanted his truck or a sizeable payment), and I decided to “save the day” by taking a $1200.00 cash advance off my credit card (at 21.9% interest…ouch) that was to be repaid within the month, so I wouldn’t accrue any fees. Well, I didn’t really consider the implications of loaning my then-boyfriend that much cash when he was unemployed (ah, how love can blind us!) – and needless to say, three years later, no repayment has been made. Add to that the fact that I was now carrying all of the household expenses – rent, food, utilities, transportation, and our dog’s food and vet bills – and within a few months, I was literally tearing my hair out of my head. I worked 80+ hours per week and made a decent salary, but at the end of the day, I was lucky to have $17.00 left in my chequing account for any frivolous wants or unforeseen necessities.
Four months after I loaned my ex that cash, I ended up leaving him and moving back to my home town..broke, broken, and mortified at my error.
Lesson #2: No matter how in love you are, make a point of treating your finances in a business manner. Good intentions don’t pay the bills, and allowing financial stress to come between you and a loved one is guaranteed not to end well.
Photo Credit: erinweed.com
Back in my home town, I promised myself that no matter what, I’d not make the same mistakes again. After all, I’d been fooled twice financially, I must have learned my lesson by then, right? Well..not exactly. I moved back in with my parents for a week, had enough, and took a friend from high school up on his offer to move in temporarily with him, his mom, and his stepdad. Life happened, and I ended up in a relationship with him (let’s call him ex #2), and mistakes were made.
When I first moved in with ex #2, he had a good job making great money sub-contracting as an insulator. I had my financial stress lifted for a few weeks, then promptly found a job at a fish and chips restaurant as a waitress making minimum wage and tips. That ended abruptly when the restaurant closed, and I went through a few other temporary positions before landing my dream job as the office manager at a used car dealership – a cushy desk job with a great salary, I was finally on the cusp of financial liberation…
…until ex #2 crashed his truck and lost his job. Sub-contracting means getting to job sites with your tools and equipment, which necessitates a vehicle. I helped him to find a car, and for over half a year made the payments on both his vehicle and his insurance (neither were cheap – all in, I was spending about $1000/month). Add to that the fact that he remained unemployed for close to a year (leaving me to buy us food, gas for his car, and pay the rent), and once again, at the end of the day, I was worth maybe $20 after bills were paid.
I really wish that were the crux of my faults here, but I’d be lying to you if I said that it was. The key to my money mistakes with ex #2 was depositing my pay cheques into his bank account. His bank allowed for immediate release of funds when depositing a cheque, and mine required a three-day hold. With bi-monthly car payments and other monthly expenses, we needed that cash to be available as soon as pay day came around, so I never actually had any money to my name, let alone in my bank account. When he would get upset with me for any reason, it would become a fight to get even five of my own dollars to go and buy a coffee with. This mistake will forever haunt me – in handing him financial control, I lost my freedom, sense of self-worth, and a lot of my own money to someone who didn’t have any respect for me – financially or otherwise. And the worst part of it all? I did it to myself by allowing my cheque to be deposited in his bank account. I wholeheartedly consider this to be one of the biggest mistakes of my life.
Lesson #3: You work hard for your money, and you should be benefiting from your efforts! Never, ever, EVER give your financial control over to someone else “just because you’re together.” If someone is irresponsible with their own finances, they will not be responsible with yours. Period.
Photo Credit: chrisjaryconsultancy.co.uk
Nowadays, my view on personal and joint finances is vastly different than it once was. As of this very moment, my fiancé and I have completely separate accounts – we don’t even use the same bank. When we need to transfer money to each other, we either withdraw the cash and give it to each other directly, or send an Interac e-Transfer. We don’t operate on a perfect 50/50 split (yet); however, my fiancé has been just wonderful about giving me not only some time to figure out my lingering financial messiness, but flipping my paradigm on its head and helping me by footing the bill for a few things (including back filing the past 4 years worth of taxes), for which I pay him back bi-monthly (on each pay cheque).
We have a very businesslike arrangement surrounding our finances, and we both believe that it is the only way to make money work in a relationship with no hurt feelings at the end of the day. We’ve agreed that for the time being, we don’t want to open a joint bank account. We both have some loose ends to tie up in regard to our individual bank accounts, and when we do eventually do the joint account thing, we both want to see it as a fresh start – we’re working hard to build a stable foundation for our future together, and that begins with being fiscally responsible. A few months ago, that seemed particularly daunting and impossible from my end; however, now that I have my taxes figured out, my credit rolling again, and I’m getting closer to having my debts repaid, I can see the light growing close at the end of the tunnel.
How do we divvy up the finances for the time being, you ask? It’s pretty simple. We try our best to be fair, within our means…which means that it isn’t really a 50/50 split (in fact, it’s pretty far from that) at the moment. We make an effort to share expenses – and as I get closer and closer to being free and clear, I am capable of contributing more and more. We have an individual chequing and savings account at our bank of choice (he’s a TD kind of guy, I’m an RBC girl), plus a credit card each. In addition, we have a jar (literally a peanut butter jar that’s been emptied and cleaned) that we throw cash into when we can. We call it our “tattoo fund,” although in reality, it serves as emergency cash for when we need to grab a taxi somewhere or whatever else we might need $20.00 on the fly for. And we make a point to spoil each other when we can – it’s nice to be able to surprise each other with things from time to time, we both work hard, and we both deserve to celebrate that!
I think it’s feasible that within a year, we’ll be heavily considering opening a joint bank account for shared household expenses – (think groceries, rent, and dog-related overhead) however, we both feel it crucial to maintain our financial independence with individual bank accounts and lines of credit. This is something I would recommend to any and every single person in a relationship who may be considering merging their money with a partner. By all means, a joint account has undeniable benefits (including lowered banking fees, greater control over budgeting, and transparency between partners); however, maintaining a personal bank account does, too. We want the best of both worlds – and we’re finding ways to make that work for both of us.
Lesson #4: joint banking doesn’t have to be a negative experience! Transparency, honesty, flexibility, and understanding between partners is crucial; however, if those criteria can be met, financial freedom and empowerment for both parties is an attainable goal. That said, it’s important to cover yourself financially, independent of your shared accounts. Consider keeping a personal banking account in conjunction with a joint account!
Photo Credit: gilmoreandgilmore.com
Do you have any joint or shared bank accounts? If so, how do you make them work with you instead of against you? Tell me all about it in the comment section below!
For now folks, I’m off to tie up some loose ends on my desk here.
Have a lovely Wednesday!
-Mel
Slegg Mortgage Press 