It’s Valentines Day. And while love can bring so much joy, there’s a much more pragmatic consideration when sharing a life with someone. By most accounts, the conversation about money and finances isn’t a romantic one but given that financial distress is often cited as the most common reason for marital breakdown in Canada, it might just be the key to protecting your relationship. Here we go;

1. Open Communication About Finances

The first step in protecting your finances is having an open and honest conversation about money with your partner. Discuss your income, debts, savings, and financial goals. Transparency is key to building trust and understanding each other's financial standing and expectations. Establishing a budget that accommodates both partners' needs and goals can prevent misunderstandings and conflicts in the future. Gone are the days when discussions about money were taboo—today is about building a solid foundation and that requires honesty.

2. Keep Some Finances Separate

While sharing your life with someone, it's wise to maintain certain financial independence. Consider having both joint and separate accounts and maintaining your own credit identity. Joint accounts can be beneficial for shared expenses, such as rent, utilities, or savings goals like vacations. However, keeping individual accounts allows you both to manage personal expenses and maintain autonomy over your finances. Also, you should both be named on shared mortgages and/or properties. This balance can protect your financial interests should the relationship face challenges.

3. Legal Agreements for Cohabitation or Marriage

Before moving in together or tying the knot, consider creating a cohabitation agreement or a prenuptial agreement, especially if there is an imbalance in the assets each partner is bringing into the relationship. These legal documents can outline what happens to each partner's assets in the event of a breakup or divorce. They can specify how property acquired before and during the relationship should be divided, protecting both parties' financial interests and providing clarity and fairness.

4. Estate Planning and Retirement Savings

Estate planning is not just for the elderly or the wealthy; it's a critical component of financial security for couples at any age. Ensure that your estate plans, including wills and beneficiaries for retirement accounts and life insurance policies, are updated to reflect your current relationship or wishes. This step is crucial for protecting your partner and any children you may have together or separately. Additionally, create a shared strategy for contributing to retirement and savings accounts like RSPs and/or spousal RSPs and TFSAs, considering tax implications today and down the road. This helps to secure your financial future, both as individuals and as a couple.

5. Protecting Your Children's Future

When children are involved, the financial implications extend even further. It's important to plan not only for you and your partner's future but also for your children's. This includes saving for their education through vehicles like RESPs, appointing guardians in your will, and ensuring that child support arrangements are clear and fair. Discussing how to manage finances for the benefit of your children can prevent potential conflicts and ensure that their needs are met, no matter what the future holds.

In Conclusion

While love is a beautiful and life-changing experience, taking steps to protect your finances is a practical and necessary aspect of any relationship, especially in the spirit of Valentine's Day. By fostering open communication, maintaining some financial independence, setting up legal safeguards, planning for the future, and considering the needs of any children involved, you can enjoy the romance of your relationship without financial stress. Remember, love is love, but ensuring your money is safe is a testament to the care and responsibility you have for yourself, your partner, and your family.

Happy Valentines Day Everyone!

Kayte