USA TODAY , JAN 19, 2004

Book: Treat relationship like business: It helps to avoid money squabbles

THE 7 MOST IMPORTANT MONEY DECISIONS You'll Ever Make
By Mary Claire Allvine and Christine Larson

Forget jealousy, new in-laws, the remote control. Money is the biggest source of squabbles for engaged couples and newlyweds.

In THE 7 MOST IMPORTANT MONEY DECISIONS , financial adviser Mary Claire Allvine and writer Christine Larson say the best way to prevent conflicts about finances is to treat your relationship like a business.

Marriage -- they say -- is a merger. Like any business, the new enterprise needs a mission, a business plan and a board of directors to succeed.

"Simply recognizing that your relationship is a de facto company goes a long way toward resolving the tension involved in money discussions," they write.

Far from taking the romance out of marriage, Allvine and Larson claim, their professional approach to personal life enhances relationships. They even have a section called "Better Sex Through Financial Management."

This is surely going overboard.…Despite all this, THE 7 MOST IMPORTANT MONEY DECISIONS system makes sense.

The underlying idea is to take an organized and deliberate approach toward finances. It starts by naming and ranking your top goals and priorities as a couple. What is it that you want to get out of life? How do you want to live now, in five years and in the long-term?

This helps couples think strategically about how they handle money instead of following the simple axiom, "Spend less, save more." A couple who decide their top priority is to travel while they're young, for example, might worry less about saving than a couple eyeing their dream home.

Looking at money this way diffuses some of the emotions and can help you see the rationale behind your special someone's penny pinching or loose spending.

The next step is to begin tracking your investments, cash flow and net worth. Sit down together and figure out how much you owe, how much you own, how much you spend and where your money's invested.

Here's where the conflict prevention comes in. When making a decision that might otherwise cause strife -- Can I quit my job? Can we afford an entertainment center? How much should we spend on a house? -- look at how the decision would affect your cash flow and net worth, then assess how the change reflects your priorities.

Armed with this information, the decision should be easier. If ending your unhappiness at work is more important to the two of you than other goals, go for it.

But if buying the entertainment center would push you off-track for a higher-ranking goal -- homeownership, say -- you'll either skip it or reassess your time frame.

The rest is just smart money management.

MARRIAGE MERGER TIPS

Allvine and Larson offer these additional tips:

* Don't put yourself on a budget. They're as hard to follow as a crash diet, and the consequences can be just as bad.

* Instead, track how much you spend from month to month. Then you can look for places to cut back.

* Forget separate checking accounts. It's easier to track your cash flow with just one account.

* Make sure you don't have duplicate investments. You'll cut risk and likely make more money if you diversify your portfolio.