50+ SAMPLE Financial Agreement

What Is a Financial Agreement?

A financial agreement is a formal agreement that is made between two parties with regard to settling funds or any financial aspect of a particular project, venture or partnership.

According to an online article by CNBC, divorce can be financially devastating. When spouses decide to go separate ways, the issue of property and assets can be very contentious. There are five key issues that couples must take into consideration during the divorce process. These issues are deciding between mediation versus litigation, long-term budget, asset protection, taxes, and updating key documents.        

Tips For Creating a Financial Agreement

Like in any formal agreement, there are certain procedures and standards that need to be followed. In order to ensure that your financial agreement is practical and sustainable, there are certain proactive steps you can take. The following examples below are some simple tips to make the most out of your financial agreement. 

Consultation is key. A financial agreement, as in any agreement, requires the participation of different parties. Typically, two parties are involved but sometimes there can be multiple participants in a single contract. Regardless of the number of parties, a key step in drafting a solid financial agreement is consultation. There must be an effort on each side to sit down and discuss each other’s needs and requirements. Consultation does only pertain to those directly affected by the agreement itself, but it could also mean consultation with a legal adviser, other team members, or even a trusted friend. A formal financial agreement is binding in nature; so as much as possible, you want to minimize any risk or potential mistakes when it comes to the actual drafting of the contract. A simple yet effective way to achieve this is by always holding consultation meetings first. Practice fairness. Some societies and cultures find it uncomfortable to openly talk about money. Other people view finances as a sensitive subject. Money is deemed important and seen as valuable in a majority of societies. Thus, whenever there comes a time for individuals to share or spend money, many are understandably wary and careful. They want to make sure that their financial spending is worthwhile or at the very least expect a return or some gain. Entering into an agreement, especially a financial agreement, requires a degree of trust and fairness. To make it more worthwhile, feasible and sustainable, both parties must then be able to trust each other and practice fairness when laying out the agreement’s provisions. Learn to listen. You cannot consult effectively or promote fairness if you are unwilling to listen. A contract agreement requires that the parties involved have a mutually beneficial exchange. More often than not, it would often result in a compromise. This is not necessarily a bad thing because settling disagreements and being able to come to an understanding is what ultimately matters. Learning to compromise takes active listening. If you are unable to listen to the other party’s argument, chances for a viable agreement to be sustained are diminished. It is important for both parties to be able to sit down and consider the other party’s needs. Both sides need to matter for the contract to work in the long run. In many cases, seeking the middle ground is the only practical solution left, otherwise the partnership fails and no agreement is reached. It’s all in the details. Ideally, there should be no stone left unturned as far as financial agreements are concerned. Individual assets and finances carry a lot of weight for most people. It is best not to leave these types of things to arbitrary forces. Therefore, a contract as important as a financial agreement should contain specific details and clauses. Obviously, the conditions set will depend on the mutual understanding of the parties involved. But whatever the stipulations, the details should not be left out. Terms that are excessively general or too broad may leave much room for misinterpretation and potential loopholes. As much as possible, you want to avoid these potential scenarios that will only cause further complication and confusion.

Types of Financial Agreements 

The creation of a financial agreement can apply to dozens of scenarios. From professional partnerships to personal assets, financial agreements are some of the most common but contentious contracts. The examples below describe the most common sample financial agreements that many people face.  

Sponsorship Financial Agreement. A common type of financial agreement is a sponsorship contract. In this case, a sponsor is willing to shoulder the costs of a beneficiary. The beneficiary can be an individual or an organization. Many cases involve a donor or benefactor covering the costs of a particular program or project. Sponsorship is also quite common in events. An event organizer may reach an agreement with one or several event sponsors. The very nature of sponsorship is support; and in a majority of cases it essentially boils down to monetary and logistical support. A financial agreement clarifies the support to be given and outlines the conditions in which both the beneficiary and sponsor are required to fulfill. It also covers the scope and sets the limitations with regard to sponsorship and support. Marital Financial Agreement. When it comes to marriage and civil unions, it can get a little complicated when property and assets are involved. Even if a lot of couples opt for joint ownership and equal access to their possessions and wealth, some prefer to draw up provisions in the event of a fallout or failure in the marriage. Prenuptial agreements touch on various aspects, but most especially the couple’s property and finances. In other cases, a couple may need a financial agreement to facilitate a legal separation process. Divorce can also cover a range of formal contracts and various settlements, which can include custody papers and financial agreements. Loan Financial Agreement. Another common financial agreement is between a lender and a borrower. People take out loans to finance all kinds of things and to meet various needs. If an individual cannot afford to pay for something, he or she is typically left with no other choice but to borrow money or take on credit. Banks and other lending institutions safeguard their interest by employing all kinds of insurance policies. Lending money is a risk and this is normally tempered by the creation of a formal financial agreement contract. The contract is meant to document the agreement, promote clarity, transparency and to set boundaries with regard to the use of the loan. It is essentially a business transaction where the partnership is formally documented and both the borrower and the lender lay out provisions and come to an eventual mutual agreement.

How to Create a Financial Agreement

To begin writing a financial agreement, you must keep in mind a number of steps. And if you are looking for greater convenience and efficiency, using a ready-made template will save a lot of time and energy. Easily browse and choose a sample template of your choice from the selection above and follow the basic tutorial guide below.   

Step 1: Identify the Parties Involved

As an opening paragraph, you need to first determine who the participating parties are in the financial agreement. Assign each party a name or term, depending on the type of agreement. For instance, a sponsor and a beneficiary enter into an agreement that states that the former is to cover all expenses and costs of the latter’s education. In other words, both the identities of the financier and the scholar must be fully disclosed in the written agreement. The format of this section may vary depending on the preference of the parties, but generally the complete name and address must be stated. 

Step 2: Provide a General Background

After establishing the identity of the parties involved, the next step is to offer some context with regard to the partnership or relationship. What kind of financial agreement is being established? Why is there a need to put the agreement into formal writing? Giving a brief history or overview of the relationship between the parties can help the reader better understand the dynamics of the partnership. Anything relevant that pertains to the financial circumstances of both parties can be included. It is not absolutely necessary to go into much detail in this section. Although as much as possible, you want this section of the agreement to be clear and direct to the point.       

Step 3: Outline the Terms and Conditions 

A key component of your financial agreement is the provisions. Some might argue that this is the meat of the entire agreement. This section is critical because it outlines the different terms and conditions that both parties must adhere to. Each party has a role to play in the arrangement; but these responsibilities come with certain conditions. There must be clear-cut terms to deter any breach of contract. Some examples of common provisions include amount to be borrowed, payment scheme, release of liability, repayment terms, termination of contract, duration of financial support, contract amendment guidelines and terms of distribution.     

Step 4: Formalize the Agreement

Once you have laid out the terms and conditions, the last section of the financial agreement should be reserved for the confirmation of the agreement. A formal declaration indicating that both parties have reached a mutual agreement is enough. It does not have to be a lengthy statement. However, there must be enough space for both parties to affix their signatures and designation. And although witnesses are not always called for in these types of scenarios, some situations would require legal endorsement. In cases such as divorce settlements, legal procedures can get quite technical and witnesses may be called to affirm the agreement. 


How do I write a financial agreement?

To write a financial agreement, you need to establish the parties entering into the agreement and determine the provisions that will guide both parties. Refer to the steps above for a more detailed description on how to create a financial agreement.

Can you write your own financial agreement?

Technically, no. Most financial agreements and contracts need to go through various consultations either with the other party or with third parties. In a lot of cases, legal counsel is often sought when drawing up a formal financial agreement.

Is a financial agreement a contract?

A financial agreement is a contract. It represents the documentation that two parties or more have reached a mutual agreement on financial matters. In many cases, it is legally binding as well.

A written financial agreement is important to have as insurance for a lot of business and financial transactions- sponsorships, lending, healthcare coverage, etc. It not only needs to be clear and coherent, it should be comprehensive as well. Browse the dozens of sample templates above and get started on your own financial agreement today!