No matter if it is a business partner, family member, or significant other, money is often cited as the major cause of divorces, business failures and of course family feuds!
This is often the case, when one partner hides assets, opens “secret bank accounts” or simply spends without letting the other person know!
So, how should money be handled in relationships?
First thing, before entering any type of relationship that involves money, you need to have a money discussion.
For (potential) spouses: Discuss financial affairs such as how situations will be treated in the event an in-law needs to borrow money. Determine how financial affairs will be handled, such as whether there will be one account or two.
For business partners: Discuss how profits will be shared? How long will cash be held in the business? What will happen in the event a partner decides he wants to buy out?
How will this person be compensated?
Before entering a relationship, you have to come clean concerning your finances. This means discussing past bankruptcies, financial mistakes, and/or credit issues. It is not a good idea to discuss this for the first time while applying for a loan. Come clean concerning current assets you own and more importantly who you owe as well. This way, both parties can decide whether they have a desire to move forward concerning pursuing a relationship or take an alternative route.
Doing this beforehand can prevent financial infidelity.
Both parties must be involved
One of the quickest ways to financial infidelity is one of the partners leaving the financial affairs to the other partner to handle. For instance, at tax time, it is a good idea for both spouses and/or business partners to review their tax returns instead of leaving it to one person who may be better at handling the finances. Both partners should review income and expenses to determine where funds are being generated. This is also the case in business relationships. All business partners involved should be involved in financial affairs.
Lastly, if you suspect your business/marriage partner has secret bank accounts and assets, be proactive. Observe spending habits and become more involve concerning your finances. This may take scheduling a date each month concerning your finances or seeking the help of a financial advisor or CPA.
Kemberley Washington is a certified public accountant and the author of The Ten Commandments to a Financial Healing.