Combining Finances as a Couple
When couples decide to combine finances, whether through marriage or a living arrangement, the last thing on their minds is money. Many believe that the money issue will be an easy transition. For couples with great communication, this is most likely true. However, that communication must include talking about finances. There are specific topics that need to be discussed. Below are some tips for new couples when merging finances.
Discuss spending and saving habits
Some people tend to be more natural at saving, and others think with their hearts first and wallets second. There is room for all types of personalities in a loving relationship. The key, however, is being honest with your loved one about your spending and saving habits. Each person can learn from the other. By identifying each other's strengths and weaknesses, both parties can learn to bring out the best in the other, and gently encourage their partner into developing better financial habits.
Talk about any outstanding debt
Joining assets legally through marriage, and not talking about how much you owe on credit card debt or student loans can start your joint life off on the wrong foot. Many surveys have concluded that the number one thing that most couples argue about is about money. By not disclosing your debt, this could make future money issues even worse. This is not about playing the blame game, however. It's about knowing in advance the financial situation each person is bringing to the table in order to tackle future financial goals and obstacles together.
Talk about how you will join assets
Some couples merge all of their assets into one bank account. Couples that do this oftentimes can save money more quickly and achieve financial goals easier. However, it does not come easily. If a couple decides to go this route, they must put some rules into place. For example, bills must be paid first and anything purchased by either partner individually over X amount of dollars must be discussed with the other partner first. This can prevent impulse shopping and spending money on things that aren't a priority. This amount can be determined in advance and can change later on, depending on the couple's financial situation. A couple must also decide the amount they want to dedicate to savings, investing, or paying off loans more quickly.
Other couples may decide that having separate bank accounts is the best decision for them, and there's nothing wrong with that. If you decide to have separate accounts, then a discussion about who is going to pay what is necessary. Having a third account, set aside for saving that both couples contribute to, is another topic couples need to consider in order to achieve their financial goals together.
Even if people don't want to admit it, money is a very emotional topic. When we bring in another person into our lives and include them in our finances, it gets a little more complicated. Open communication, in addition to discussing specific topics and goals, is important in order to make this transition go more smoothly. You must also recognize the need to consult outside sources when necessary, so that both your relationship and pocketbook can live in perfect harmony.