Is love coming in the way of your finances? Often, people let emotion rule their financial destiny when it comes to dealing with their near-and-dear ones. Here are some money choices that you should avoid to protect your finances. 

financial mistakes to avoid

1. Overspend

Exotic wedding destinations and expensive gifts create quite an impression. Many go overboard while spending on their wedding or that of their children. While an occasional splurge in smaller proportions doesn’t matter, a big ticket expense can haunt us for years.

So stay within your budget. If you want to really buy something, try floating a separate fund and start saving for it. Refrain from borrowing in order to buy something you can’t really afford.  

2. Leave all financial responsibility to your partner 

Relegating financial responsibilities to your partner might not be a wise choice, even if they are financially savvy. It is important for each one to be on top of finances. At any point in time, they should know how the money is flowing in and out, while all the family members are apprised of financial matters – be it about existing investments, loans and insurance. In case of an unfortunate event, it will help the family members deal with it in a better way. 

So, even if you hate doing certain things – like say investing or paying bills online – occasionally do it by swapping responsibilities. That way both will be trained to single-handedly manage family finances if need be. 

3. Lend to friends and family members

If a cousin or a friend asks for a loan, you might feel obliged to give. However, clearly figure out as to when you would want to pitch in. For instance, if it is for a medical emergency, then you probably might want to lend and not when it is for a lifestyle expense like buying a car or a gadget.

The cardinal rule is that under no circumstances should you let it put your finances in jeopardy. So, lend only to the extent you are comfortable with. In cases like medical, be mentally prepared to write-off the amount (under worst circumstances). Also, do the necessary cross-checking about the track record of the borrower. 

So, even if you hate doing certain things – like say investing or paying bills online – occasionally do it by swapping responsibilities. That way both will be trained to single-handedly manage family finances if need be. 

4. Undertake joint credit

One spouse’s poor credit score doesn’t impact the other. However, if you jointly apply for a loan or add the other as an authorized user on your credit card account, the history of that account will get reflected in your credit reports as well. How could it impact you? Supposing you have a relatively better credit record than your partner, then taking a joint loan with your spouse (for say buying a car) can drag down the overall credit score and result in a higher interest rate on your loan.

So, go through the pros and cons before undertaking a joint credit.

5. Support the finances of adult children

As parents, we are naturally inclined to reach out to our children. Apart from higher studies, we incur their household expenses, while they live with us. After marriage, the financial support continues for house down payment, grandchildren’s education and so on.

While providing emotional support to kids is a lifelong activity for parents, financial support needs a boundary, lest it jeopardizes your retirement goals. Therefore, your financial security comes first, and not for selfish reasons. After all, if your retirement kitty is large enough, you will not have to be dependent on your children later. 

So, set boundaries and make them financially responsible early on by contributing to household expenses. Don’t overstretch your finances to sponsor their college education. If need be, take a student loan that can be funded from their future earnings.

6. Not talking goals and budgets

Once you are married, you need to work as a team. However, varied your personalities might be, you ought to arrive at a common vision by fixing family goals like that of retirement or a child’s education. One might prefer a lavish retirement lifestyle, while the other favours a frugal one. The target retirement nest will differ based on the retirement lifestyle one chooses and for how long the couple plan to work. It is therefore important that they talk about it with their partner and arrive at a mutual consensus.