Here’s What You Need To Know If You’re A Couple Combining Finances
If you’re part of a couple, does how you go about merging your finances make a dime’s worth of difference? You bet.
According to Zoe Coetzee, EliteSingles’ in-house psychologist, “Money can represent both power and security in relationships, making it a challenging, but necessary, issue for couples to navigate.”
A survey conducted by EliteSingles revealed that 70 percent of women and 79 percent of men find fiscal responsibility in a partner a desirable quality. Communication is essential if money matters are to be managed equitably and with the least amount of discord.
Here are some financial practices that can help couples navigate money matters better. After all, managing your green shouldn’t have you seeing red.
Discuss Money Matters
Keeping financial obligations or mistakes from your partner can lead to distrust and limit the establishment and success of shared financial goals. Discuss major money issues with your partner before you decide to merge your financial assets, accounts, or debts. When it comes to money, transparency can lead to harmony.
Consider Merging Finances
When and how to merge your finances should be informed by each partner’s financial status, beliefs regarding money, prior obligations (such as alimony or child support), and individual comfort levels. These days, it’s not uncommon for people to keep the bulk of their finances separate and have one joint account that each person can access. Combining your funds makes the most sense if you’ve been in a committed relationship for a while, or if you’ve taken the plunge and said “I do.” Hopefully, at that stage in a relationship both individuals will have a good understanding of how they view money matters, including saving, spending, credit card use, and long-term financial goals.
Be Realistic (And Honest) About Debt
It’s never a good idea to ignore debt or to pretend it doesn’t exist. Debt isn’t an easy subject to broach, but being upfront about it can prevent arguments, accusations, and the accumulation of resentment. According to a survey conducted several years ago by Policygenius, many of the people surveyed admitted they don’t share basic financial information, including debt, with their partner. Thirty-eight of respondents reported not knowing about their partner’s debt or assets. It’s best to openly discuss debt and work together to devise a debt resolution plan with which you’re both comfortable.
Develop A Workable Budget
A budget should work for two – not just you. Following a budget that you’ve both agreed on helps ensure that neither person is overspending in any one area. Budgetary guidelines offer a realistic overview of what you can and can’t afford, and provide an accurate picture of how much money is coming in and going out. A budget can also help eliminate “surprise” purchases that can throw your finances off track and wreak havoc on your relationship. CreditCards.com reported that one in five Americans who spend $500 or more on a purchase don’t tell their partner about what they’ve bought. But asking “permission” for every purchase isn’t doable on a routine basis; consider establishing a rule such as checking with your significant other when spending $100 or more, or another amount that you both feel is reasonable.
Take A Look At Child-Related Expenses
Today’s blended families are, well, a blend of many things – including finances. Co-parenting means that you and your partner will need to determine who pays for what when it comes to kids. Will both of you pay for childcare? How will you divvy up paying for healthcare? Will college tuition down the road (or next year!) be something you both take on, or will it be only one person’s responsibility? A parent’s love for their child is priceless, but the costs associated with child rearing can be significant. An open and honest conversation about these types of expenses can go a long way when it comes to avoiding conflict.
Invest Time In Discussing Investments
Talking about investment plans and portfolios is often put on the “to-do list,” taking a back seat to concerns about day-to-day finances, paying bills, and staying out of the red. But if the two of you decide you’d like to invest in stocks and bonds, start by having a conversation about your individual risk aversions. Even though each of you might have your own portfolios, any changes in them could affect you both. When investments are mutually agreed upon, trust can grow right alongside any money you’ve decided to set aside for your future.
Consider Long-Term Plans (Even If They’re Not Pleasant)
Let’s be honest: Most people don’t jump at the chance to plan a will or address life care directives, but they are a part of adult life, and sound financial planning takes into consideration these types of decisions. Well-thought-out pre-arrangements can help to alleviate potential financial stressors that may come about later in life. Talking about the future and devising a plan to manage financial decisions such as long-term care, healthcare, or funeral costs will help you feel more secure about the future.
It’s Not That Money Talks – It’s That You Should Talk About Money
Money matters continue to be present throughout the course of a relationship. When you’re dating. When you marry or decide to live together. When you have children or take care of an aging parent. When you retire and plan a post-working life. When you consider end-of-life choices. Ongoing communication about finances allows you to make decisions based on your monetary beliefs, priorities, and life goals. Talking about money can be difficult, but not talking about it can bring even more difficulties down the road. You and your partner may not agree on everything money-wise right from the start, but with thoughtful, ongoing discussion you can find a way to resolve most money matters productively and amicably. And save yourself a whole lot of aggravation.