Everyone has a unique relationship with money and how they
manage it. Some of us are natural-born scrimpers and savers. Others
have a hereditary flair for spending and spilling red ink. Most of
us fall somewhere in between, relying on a personal approach to
finances that we've forged over a lifetime of trial and
Things get tricky, though, when our relationship with money
differs from that of our closest friends and loved ones. To avoid
hurt feelings and heated clashes, here are some time-tested tips
for defusing potential financial conflicts before they happen ...
and keeping the peace with everyone involved.
Among Friends and Family
Shakespeare wrote "neither a borrower nor a lender be," and many
think that's especially true for friends and family. Others take a
more charitable view: If you lend close friends and loved ones
money, consider it gone; if you get it back, consider yourself
lucky. Before mixing money matters with friends or family, consider
these important steps:
1. Ask tough questions. Does the borrower have
other options? If a bank won't lend them money, find out why. If
unmanageable debt is the issue, personal finance expert Suze Orman suggests you
tactfully recommend they get some credit
2. Eliminate guesswork. If you do provide the
money, decide first whether it's a gift or a loan. If it's a loan,
you should put the terms in writing. You might even want to get an
impartial third party involved in the negotiations, especially if
you're handing over a large sum. Keep track of repayments made in
installments using records and receipts.
3. Avoid flash points. Around some dinner tables,
money can be a touchy subject. A wealthy parent or more successful
sibling, for instance, can shift the power balance in a family and
become the one others turn to in times of financial need. But if
borrowing threatens to create a family rift, Bankrate.com suggests being
discreet about who lends what to whom; sometimes, mum's the word.
When the transaction is between friends, don't attach strings to
the deal or let the loan strain your personal relationship.
In money matters, spouses and partners face unique challenges
requiring extra diplomacy. When couples function as a financial
team, they stand a better chance of negotiating the money minefield
with greater success, and the relationship reaps dividends, too. In
Forbes.com article, finance writer Emma Johnson notes that
"shared goals will bring you closer." No matter what happens, deep
emotions are bound to get stirred, so it's best to take a step back
and (as hard as it sounds) try to be objective. Here are some
1. Communication is key. Think your partner is
stubbornly stingy or far too loose in his or her spending habits?
Say so and see if you can meet each other halfway. Talk openly,
honestly and non-confrontationally. When financial disputes flare
up, Dr. Phil says you should ask
yourselves if money is really the root of the problem.
2. Be transparent. Don't hide money or credit
cards from your partner. You can maintain separate accounts; just
don't keep secrets about debts and expenses. While Dr. Phil
advocates keeping your finances separate, other experts suggest
sharing one joint fund while maintaining individual accounts.
3. Create a plan. Set realistic goals for savings
and investments with your partner. In a recent online
interview, so-called "Money Couple" Bethany and
Scott Palmer (authors of "First Comes Love, Then Comes Money")
recommend meeting regularly (once a month, say) to see if you're
both sticking to the agreed plan. If not, be honest when certain
targets haven't been met. Remember that nothing's set in stone. You
can be flexible and adjust your objectives if they don't seem to be
Like you, GEICO takes pleasure and pride in maintaining a balanced
bottom line. To read what independent analysts have to say about
our exceptional corporate financial strength, visit