Week of 2.19.10
Book Excerpt: "Get Financially Naked"From Get Financially Naked, Copyright © 2010 by Manisha Thakor and Sharon Kedar. Used by permission of Adams Media, an F+W Media, Inc. Co. All rights reserved.
How Financially Compatible Are You?Where the Rubber Meets the Road
As we've traveled the country for the past few years, we always tell people that the first step in this process is to understand what each of you OWNS, what each of you OWES, what you EARN, and what your CREDIT SCORE is. (Your credit score is a 3-digit number that summarizes your financial reputation).
We are talking about Getting Financially Naked when you are in a serious and committed relationship. The most common question we get when we give this advice is, "What does a serious committed relationship really mean and when exactly do we Get Financially Naked?" We define a serious committed relationship as one where you trust the person you are with and you can see yourself with this person for the long term. When exactly that moment happens in your relationship will be highly personal. We know people who've felt it on the second date and others who didn't feel it until they were in the second year of dating. The key is once you get that gut feeling telling you that this is "The One," it's time to start Getting Financially Naked.
If you are not in a serious relationship today, are "just dating around," or are not even dating at all... please continue reading. Having a solid understanding of this process before cupid's arrow hits will be critical to helping you stand on your own two feet and live your life from a position of financial strength when that special person arrives. You need to know now what to do when love strikes, because the odds are high that when you meet "the one"... reading a book on personal finance is not going to be high up on your list of to-dos. Before we get into the nuts and bolts, however, let's address three of the most common questions that we get whenever we bring up this subject.
1. When is it okay to bring up money with my mate? Is it okay to do it when we are "just dating"?
We believe the earlier the better. That said, our intention is NOT to cause your sweetie to freak out on a first date by bringing up the subject of the thousands of dollars of credit card or student loan debt that you (or McDreamy) are hoping to pay off. Our point is simply that once you can see yourself getting serious with your potential mate, we believe it's time to start talking about money. As to the exact timing, again, it really is up to the unique nature of your particular relationship. For instance if you are wondering how your mate can afford the fancy Vegas vacations and high-priced meals on a teacher's salary, it's reasonable to bring up money early on. Relatedly, if you have some financial hiccups of your own, we believe it's important to come clean earlier rather than later. We've heard of all too many seemingly promising relationships that end when after an extended period of dating, one partner discovers the other is deep in debt. Typically this issue is not so much the debt, as the fact that it was not discussed early on. When you start to Get Financially Naked, you'll learn a lot about your financial compatibility simply by seeing how your honey responds to your bringing up the topic of money.
2. What if I know my partner is not receptive (or I find out during the conversation that my partner is not receptive) to talking about the topic of money?
Just because you get an initial cold shoulder doesn't mean you two are doomed in the financial harmony department. Our recommendation is to tee up the conversation by talking about YOUR views on money, and seeing if you can ease in with the Financial Foreplay questions from Chapter 3. The key is this: Don't give up and be persistent. Your mate's reluctance to discuss money could very well be simply a sign of painful, but resolvable, issues in their money history (recall the exercise you did in Chapter 2 about your money history and what you learned about yourself). A cold shoulder does not mean it's okay to just ignore the conversation about money. It means there are some underlying issues that, if explored, may actually bring you closer—emotionally and financially.
As you approach the topic of money with your honey, if your partner is reluctant to talk about money, you'll want to be very sensitive to how you respond to anything that does bubble up. Money is a hot button for many people. When your partner does begin to open up, it is essential that you listen and be supportive to whatever is said. There will be plenty of time down the road to discuss areas of disagreement or places where compromise are needed.
3. My partner is wonderful, loving and very generous toward me. However, I'm worried because the math just doesn't seem to add up. When I look at what my mate does for a living, it doesn't appear to be the type of career with the salary level necessary to pay for the kind of lifestyle my partner leads. How do I bring this up?
The harsh and sad truth is that literally millions of Americans, at all ranges of the income spectrum, live beyond their means. They bridge the gap between their income and their expenses by running up hefty balances on their credit cards or taking equity out of their home. If this is how your mate is funding their lifestyle, you owe it to each other and the integrity of your relationship to know about it. Maintaining a lifestyle beyond your reach through the use of credit is not sustainable and typically ends up resulting in severe financial distress—not to mention the possibility of being hounded by bill collectors or ending up in foreclosure. One way or the other you two will end up discussing your finances. Your goal is to do so before it torpedoes your relationship.
Time to Start Peeling Back the Layers
Before stripping down to your financial bare bones (by disclosing what you Own, what you Owe, what you Earn, and your Credit Score), we're going to ask you and your partner to take a "Financial Compatibility" quiz. There are 30 "Yes / No" questions for each of you to answer. It's a short exercise and should take less than 10 minutes to complete. Once you've both completed the quiz, we'll ask you to share and compare your answers.
Some of you may be wondering—how scientific is this quiz? The short answer is... It's Not. It's a qualitative exercise designed to help the two of you further reveal to yourselves and to each other how you approach money. There is no "right answer" or "best score." The quiz has 10 questions about money, divided into 3 categories: Interest, Knowledge, and Behavior. There's no judgment here. Any response is a good response because it reveals how you truly feel. All we ask is that you are honest with yourself and your mate in responding to these questions.
Hopefully this array of honest feedback has made you realize that you are not alone. Pretty much any feeling you've ever had about money, someone else has had it as well. We're all in this together. So let's get started with the quiz so you can get started getting closer to your mate and your dream financial life. IMPORTANT NOTE: If you are not in a committed relationship right now—go ahead and fill out this quiz in the context of your own personal financial situation. You'll learn a lot about yourself. If you are in a committed relationship, you'll still want to fill out the quiz on your own (and have your partner do it separately as well). However, you'll want your answers to be in the context of your household. For instance, you may know how much of YOUR income you are saving for retirement, but for purposes of this questionnaire you'll want to answer the question for your household—i.e., do you know how much both you and your mate are saving relative to your combined incomes, etc.
The "GET FINANCIALLY NAKED" Compatibility Quiz (pdf)
Book Excerpt: "Get Financially Naked"
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