Thinking about making a large purchase with the help of a boyfriend or girlfriend? A car, a house, investing, or even starting a business? A lot can be said about the “dos,” “dont’ts,” and limitations or restrictions that are placed on relationships that don’t hold the title of marriage. We all can think of a few from that imaginary book of “That’s Not Your Husband/WifeRules” lol. And I get it. Those rules are put in place to protect oneself emotionally and financially. I mean nobody wants to be too invested in something that doesn’t work out. Healing your heart after a breakup can be a lot. Imagine also having been financially invested and now having to deal with a financial set back. Even divorces can get extremely messy and nasty when it comes to the finances and who gets what. So, it is completely understandable to be weary about making a financial decision with someone that you aren’t married to.
However, with the wealth of financial knowledge now being brought more to the forefront on social media platforms via various individuals and groups spreading this knowledge, millennials are taking that leap financially and investing and becoming entrepreneurs. With the large percentage of millennials wit student loan debt, many millennials are also looking for ways to supplement their income. And multiple streams of income is always a good idea. The Covid-19 pandemic has also showed us that a second or third source of income is helpful when your main source is compromised. Because millennials are choosing to get married later in life, they’re taking these leaps single or as non- married couples.Depending on the cost of living where you’re located, it may also be a beneficial idea to move in with a partner. Two is better than one. So, I’ve provided a few tips for when considering moving forward with making a large purchase with a partner.
When it comes to investing or starting a business I say GO FOR IT! So, I’m obviously not coming at you as a Debbie downer regarding your relationship because I’m all for it. However, I am aware that everything may not be for everyone at this current moment. My suggestion is to fully assess your situation. Are you and your partner on the same page about where you stand with each other? Let’s be real, some people are in relationships with their partners while their partners are single. If you’re not, it’s okay. After reading these tips, you may find that you are still fit to be business partners. And you probably wouldn’t want to jump into any financial binds with someone after only being with them for three days. Are you and your partner both in stable enough situations to invest? Below I’ve listed a couple of tips to keep in mind after deciding to move forward.
Tips for Purchasing Large Assets and/or Liabilities with Your Partner:
Tip 1: Plan it out
Put together a plan. I wouldn’t recommend just jumping into anything involving a large price tag. I would strongly suggest a safety net being a part of that plan. Decided what it is you’re trying to purchase/invest in. Determine your goals for the purchase; short term and long term. Keep in mind its all up to you. If the purchase is an expensive piece of artwork, the goal of can just be to add beauty to your home. Consider factors such as how soon you’ll make the purchase, when you’ll begin seeing a return from it if it’s an investment, and if it can fit into your current budget. The planning phase is where you’ll actually decide if it is the right time for the purchase.
Tip 2: Know Your Budget
Know all of the expense that come with your purchase. The purchase may be one you have to finance, meaning you’ll have a monthly payment. You may incur expenses along the way. This is typical when dealing with real estate whether you’re purchasing a home for yourself or an investment property. Some investments will require you to have a reserve fund. Be sure that not only the purchase but any maintenance required for it fits into the budget. Always remember, just because you can pay for it, doesn’t mean you can afford it. The same goes for purchases that are financed. Just because you can make the monthly payment, doesn’t mean you can afford it. If it is a purchase that will be made in full up front, be sure that it doesn’t drain both parties. I don’t think there is a perfect or tailor-made way to invest, but when doing so, I never allow myself to be “cash poor”.
Tip 3: Have your paperwork in order
Officially set up and have the proper documentation completed to establish yourself as a business in the state you reside in. Whether you decide to set up an LLC or S-Corp is determined by what is best for your business, personal liability, and how you want to be taxed. With this documentation in place, there are various ways ownership can be set up between both parties. Whether it be both parties having co-ownership or one person being the owner and the other having a stake in the business.
Assets and liabilities that are attached to paperwork must go in someone’s name regardless of how it is agreed it will be paid for. This is where it may get tricky, but it doesn’t have to. My rule of thumb is to be able to afford whatever the payment is for whatever is attached to my name regardless of who is in charge of the payment. This way the payment can always be made. Being able to make the payment when the payment isn’t my responsibility or may or may not be solely in my name is a way I act as a safety net in some of the investments I’m involved in. This is how I went about determining the budget when I was house hunting. ***What I Learned While Trying to Buy a House During the Pandemic*** If the purchase isn’t being attached to your name, that doesn’t necessarily mean you are in the clear. If your name isn’t on it, technically you have no ownership. In this case, I suggest always being able to afford your own or a plan B because you’ll always need at least the basic needs; a roof to go over your head, clothes, food, and transportation.
Tip 4: Live within your means
I mainly aim this tip towards liabilities, but it’s important when it comes to assets as well. There are many ways you can invest without needing large lumpsums of money. Investing doesn’t have to be a go hard or go home type of thing. As I stated earlier, I don’t think there is a perfect or tailor-made way to invest, but when doing so, I never allow myself to be “cash poor”. With all of the talk and advertisements about the different ways you can invest being ran on social media platforms these days, it’s easy to get sucked into jumping into something you’re not completely ready for, trying to go too hard, or feeling pressured to do more than you can. Remember that we’re all moving at our own pace. That’s one of the perks of investing. You don’t have to keep up with anyone else’s program. Some people may have larger returns, but they may have been in the game longer. Remember everyone started not knowing anything.
As far as liabilities go, those are okay too. Don’t count them out. Who doesn’t like new toys? We work hard so we should be able to enjoy the fruits of our labor. You just have to know that you’re playing by a different set of rules with those. Liabilities don’t bring money in so they don’t paint as hopeful of a picture as assets tend to. But then again, if you’re just looking for a new toy, you’re not too concerned with whether it’s bringing money in. For myself, a house to live in (not a rental or fix and flip property) falls under this category because even though equity can be added and it can later be sold, for intentional purposes, it isn’t bringing any money in. A car also falls in this category for me.
Always remember mixing business with pleasure, in this case, going into business or investing with your partner…. Is never a bad idea! Bet you thought I was going to say something along the lines of going into business with your partner can be tricky or dangerous. Nope! It’s always a good thing when two people that are invested in each other are also on the same page as far as financial growth and plans for the future. Especially, when there is a solid plan in place. And in my opinion, it’s pretty safe to say that a person who isn’t in it for the long haul isn’t going to want to put themselves into any financial binds with you. Purchasing liabilities with a partner isn’t always a bad idea either. Two is better than one. Purchasing your first home or a car may be more easily obtainable with the help of someone else. Whether purchasing assets or liabilities, keep these basic tips in mind and you’ll be fine. Now let your assets and liabilities enhance your LUXE life!
And remember…
Be sure to check out “What I Learned While Trying to Buy a House During the Pandemic”
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