Are You Foolish In Love?

I think it's fair to say that many Fools are more financially savvy than most. But does that mean we always make the right money decisions? Of course not. We're only human after all! A recent survey conducted by The Fool reveals that many of us have made our fair share of financial blunders. But which money mistakes trip us up the most?

Coming in at number one in our survey are poorly judged investments, with one in eight people admitting this is the biggest cause of their financial problems. But, happily, there are money successes as well, with investing in stocks and shares reaping the greatest financial rewards for many of us too.

Take a look at the table below for Fools' Top Ten Financial Blunders and Successes:

Now while any blunders are serious, what immediately jumps out at me is number four; "my partner", because, by my reckoning, two of our biggest concerns at any given time are probably relationships and money. A surprising one in 25 people (4%) rank the wrong relationship as their biggest financial blunder, so just how well do the two mix? In a relationship, do we suddenly come over all foolish, or do our partner's Foolish ways bring us up to standard? 

I spoke to some friends and some Fools from the discussion boards to find out; the responses ranged from the good to the bad, to the ugly, and (reassuringly) back to the good again.

To start on a positive note:

The Good

According to those that I asked, by far and away the best thing about being in a relationship is the opportunity to discuss any money problems with a partner, with the support proving to be invaluable.

After this, the biggest benefit reported is the ability to meet a partner's shortfall and vice versa in tougher times (providing the partner is willing of course!)

Fools seem to be able to have a positive effect on their foolish partners, and with careful persuasion can be encouraged to change their ways. One Fool boarder recounted how their partner's overdraft was paid off, only for the debt to be rack up again pretty quickly. What's the lesson here? Handouts don't get the message across, but setting yourself up on a good financial footing first and encouraging others to follow pays dividends. This Fool is now in a financially happy relationship!

The Bad

Communication is the key -- and it seems to be the top problem for those both in or out of a relationship. One Fool boarder in serious debt has avoided relationships altogether for fear of coming clean with any potential new partners.

It does seem terribly unromantic to talk money issues and problems, but you have to be realistic. No one likes to contemplate the end of a relationship, but should yours take a turn for the worse, it makes sense to be financially prepared however pessimistic it might seem.

Remember when you enter a financial relationship together each of your credit ratings will affect the other. If you apply for a joint mortgage, for example, you may find you're offered a less competitive rate if your partner has a poor credit rating. It might be tempting here to go for a mortgage in only one of the partner's names, but this should be avoided. Imagine if you split up, leaving one partner with no legal obligation to pay the mortgage, but also no legal rights over the property.

The Ugly

Unfortunately it would also seem that the other biggest blunders from our survey -- most notably credit card problems and serious debt -- also go hand in hand with problem partners.

Another Fool boarder was once involved in a financially and psychologically damaging relationship with a partner with a penchant for expensive art. She was expected to pay half of the costs, leading to stacks of credit card debt. If she complained she was accused of preventing her partner from enjoying his life. Needless to say, arguments over this led to the eventual destruction of the relationship.

And Back to the Good Again!

Let's not forget that living together can really bring down the cost of living, as meals, bills and other expenses can be shared between two incomes.

Five Top Tips for Keeping Love and Money Harmonious

1. It's good to talk. Don't keep your financial worries to yourself, ask your partner for support.

2. Keep a joint account for bills etc, and perhaps a joint savings account, but have your own single account for your own expenses to avoid arguments.

3. Be aware that when you become financially joined, your credit rating can be affected. Make sure you tell the credit agencies should you split up with anybody you were financially connected with to ensure it's up to date and accurate.

4. Be realistic, even if it means being pessimistic. It's better to sort this stuff out at the beginning than to end up in a mess further down the line.

5. Encourage your partner to read the Motley Fool to make them more Foolish!

Many thanks to the lovely people of the Motley Fool discussion boards for their help with this article!