Last Friday, I got my 4th phone call in 2 years asking me to be a bridesmaid. Every time I get one of these calls I can’t help but think ‘I’m still so young’. I struggle with the idea that women my age are getting married and are “permanently” taking someone into their lives. These calls get me thinking about financial independence in a relationship. I’m not talking about having a huge savings account or even having a retirement account but rather being in a position to manage your own financial affairs.
Having your own checking, savings, credit cards, and knowing how to pay your own bills are essential functions of being an independent person. I worry about people my age, or any age really, losing their financial independence in a relationship.
Case in point – My best friend in the world got married almost one year ago. She and her husband combined all of their accounts, put both names on their credit cards, and pay all bills out of their joint account. I worry about her. She never really had to stand on her own. She moved from her parents paying her bills to her husband paying her bills. She currently does not work, her credit has decreased, and does not know what her next move is. Meanwhile, in their two years of their marriage, her husband saw his credit score improve, his work paid for his higher education, and he now has his dream job. Whenever I hear them arguing or listen to my friend vent, I can’t help but worry about them breaking up. It is very clear to me that she is completely financially dependent on him and this limits her options.
It seems common today that young people do not learn how to pay bills, manage their credit score, or even balance a checkbook. If they separate from their partner (or if something happens to their their partner), they end up facing a life without someone else to take care of the financial affairs. Oftentimes, the result is a period of trial and error. I don’t want my friend to have to face that.
A model of managing household finances that is reliant on one partner to “take care of it” can take away your freedom. It makes you dependent on another person, and it can cost you the ability to choose your path and the flexibility to make hard choices.
3 Steps to Financial Independence
- Maintain your credit score. Your credit score is your lifeline to financial freedom. Check your score annually (NWBRV’s HomeOwnership Center can pull your credit if you need to review it). A common misconception is that not using credit won’t hurt your score, but as with my friend, that is not always the case. Ensure you have at least one active credit account with your name on it and that it is used and paid on time. By maintaining or raising your score, you will be able to access credit if its ever needed.
- Open a Savings Account. Maintain an active savings account separate from the household finances. Put aside whatever you can in this account for a rainy day, emergency, etc. Also consider creating a retirement account in your name. Free accounts can be created through US Department of Treasury’s new myRA program. Even a nominal amount put aside in this account will provide a little cushion as you age.
- Know the Numbers. Prepare a family budget and stick to it. You and your partner should have a reasonable idea of the monthly expenses and income coming in along with account numbers, etc. in case of an emergency. By mapping this plan together, you and your partner can establish clear spending guides, anticipate problems, and support one another through hardship.
Need Help Achieving Financial Freedom*?
Our HomeOwnership Center is here to help. Create a free, secure profile through our HomeOwnership Compass portal or set up an appointment with one of our experienced financial coaches by calling 401-762-0993. Our team can help you, and your partner, establishing sound credit practices, with managing your accounts, and with creating a family budget.
*Research indicates that financial abuse is experienced in 98% of abusive relationships, and surveys of survivors reflect that concerns over their ability to financially support themselves and their children was often one of the top reasons for remaining in or returning to an abusive relationship. To get help, please contact the RI Coalition for Domestic Violence using their 24 hour helpline at 1-888-494-8100.