While being young, broke and beautiful is all well and good, some people’s finances are more jacked than others. That’s why we’ve invited Betsy Crouch (aka Coach $izzle) to come onboard and dole out some much needed advice. She is a professional financial coach after all. If you’ve got a question you’d like answered please email her atcoachsizzle@brokeassstuart.com. Maybe your question will be the next one answered.
Money and ____ don’t mix
According to many people the “fill in the blank” answer would be A: Marriage/friends/family, considering many cite money as a common reason for divorce/splitting up, and sometimes the alienation of family and friends.
I get a lot of questions about money and relationships from clients. Should I ask so and so for a personal loan? Blahbidy blah roommate is weird about splitting bills what should I do? My boyfriend wants to get a motorcycle and he has really bad credit, should I co-sign for him, or get the bike in my name? My friend so and so and I don’t talk anymore because of an argument with money, how do I prevent that from happening again?
Well although I have never been married before (I will one day when prop 8 is overturned), I have dealt with money and other people, even strangers, my whole life. I have given loans and gotten loans from friends and family. I had that friend in college who seemed to avoid picking up a round of drinks when it was their turn. I’ve had the ex who threatens not to give you the $400 she owes you. I’ve “stolen” the change out of the change jar at home when I was a kid to ride down to 7-11 and buy candy. I have had quirky money things with roommates. We all have a different and often weird relationship with money, based on our experiences. So when two or more people come together interacting with money, anything can happen, and it does.
Here are some of my favorite tips to avoid financial surprises, annoyances, fights, and frustrations.
I strongly advocate paying for what you use, take, consume. I also advocate fairness and clear communication.
1. Communicate: talk about your expectations. Speak up before you get into situations where others may obligate you to pay for more of what you feel is fair/more than you assumed you were agreeing to.
2. Don’t make assumptions! Clearly establish financial obligations before moving in with roommates, throwing a joint party with friends, taking a vacation with friends, or being in a wedding. This is not to police everyone’s contribution but to put to rest any concerns about fairness and equality, and it is important to help you plan. This is also especially important to establish with people who you have not established a financial relationship with, someone who is a friend of a friend or someone you just met. Make sure it is clear, who will pay for this? Who will pay for that? How will we split it? Who will keep track? Do you need to split pennies? No. If you keep track then no one is left wondering, “who owes what?” and “who paid what?” Also, this prevents the “big spender” in the group from going out and spending a ton on something for a party and then saying, “oh yeah, we’re splitting this,” and maybe you didn’t want to commit to that.
3. Put it in writing. I do not put agreements in writing to have dinner with a group of friends. However, when I got a loan from a relative when I was having financial challenges, we created a contract with a timeframe to pay the loan back, the interest rate, and clear details. This is one of the most common lost opportunities between friends and family members who make financial agreements. Do this the next time you take a loan from a friend or relative and when they say, “Oh that seems too businessy.” Well to that I say, “To not have it in writing, seems far too loose, unclear, and dangerous, based on how many relationships I have seen destroyed or nearly destroyed due to 1. lack of communication, 2. unclear expectations, and 3. differing assumptions. I want to do this because I care about you, I respect you, and I appreciate you helping me.” Feel free to use the script. lol.
4. Follow through on your end of the bargain, if you can’t, talk about it and work on solutions together. Again, communicate.
Do yourself and your loved ones a favor. Have the difficult conversation. Risk the possibility of being called the money geek. You may be able to laugh with them for years longer because of it.
Email coachsizzle@brokeassstuart.com with your quirky money issues with friends and family, or comment below.
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Good call! I once loaned someone money with an indefinite payback date and she ended up paying me back months later in a card for my birthday. It ended our friendship.
If you move in with a partner but you are not married but you build a home together, do you suggest some sort of “pre-nup” in case you break-up?