Here are some of the biggest mistakes that couples make with their money and how to avoid them:
Not discussing finances. Probably one of the most common mistakes that couples make before living together is not discussing how they will handle their money. If you plan to live together, you should discuss how you will share household expenses – will the person with the bigger income contribute more? – as well as sharing a bank account, credit card accounts, etc. You should also lay out your current debt picture.
Pooling money too soon. It is usually best to wait until you are married before you mingle your finances in a joint account, or make large purchases like a home or car together. If you break up, you will have none of the protections that are afforded married couples when it comes to splitting assets.
Sharing debt. Adding someone’s name to a mortgage, car loan or credit card account also makes them legally liable for that debt. You should discuss how you would treat debt responsibilities if you break up prior to making a commitment to share debt.
Ignoring the “what if”. While you probably don’t intend to break up, it is a good idea to discuss the money “what if’s” in case you do.
The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0042.