Money is a difficult and emotional subject to broach. Sadly, it is also a subject that you cannot ignore, especially if you are part of a couple. Becoming a couple means more than just creating a relationship together – it also involves being financially connected to one another. Whether newly married or moving in, save yourself financial heartache by discussing your finances together from the beginning. Even if you have avoided talking about money for years, it is never too late to start. Below are some ideas from personal finance experts. Get your goals on the table
Discuss your plans for the present and the future.
While at it, avoid criticising each other’s goals. Chances are your aspirations are very different, but expressing them will help you work out a family savings programme that reflects what both of you want. Start with a brief conversation about a small patch of your finances, like opening a joint current account. Strive to have regular conversations, say weekly or monthly, as that will make the subject easier to deal with in future.
Create a household budget
It is best to record your talks in writing; this way you will have something to refer to and keep things clear too. Talk often to discuss how you are meeting your goals and any unexpected expenses. If one or both of you is self-employed, discuss your expected income for the next three months.
Pay yourselves allowances
When you keep some money for your personal expenditure, you will not find yourself hiding secret stashes of money or concealing purchases, which can serve as the poison that eats at even the best of relationships. Set aside money for personal allowances that both of you can each spend as you please.
Combined bank accounts
Some couples never want to give up their separate checking accounts. One easy solution is to agree to put a set portion of each person’s paycheck into a joint account for shared expenses, while maintaining individual accounts. This can work especially well for couples whose assets are widely disparate. Even if that is not the case, separate accounts may still be the best approach for you. The benefits to combining a couple’s checking accounts include simplified record keeping; straightforward money management (as opposed to doing everything twice); and fewer papers to sign and process. However, with both partners actively using the same checking account, it will be all the more difficult to track each individual’s spending.
Individual bank accounts
With this there is independence and autonomy to make one’s own purchases without having to check in with a partner. Each individual builds credit independent of the other. The most obvious downfall to a separated financial arrangement is that it can seem unfair if one person makes less than half of the other, yet the bills are split equally. There is a high chance the lower-paid person will feel unable to ever get ahead or be able to purchase things beyond their immediate needs.
The last consideration when it comes to a couple’s newly combined finances is whether or not credit will be applied for jointly or separately. Should either of you want to make larger purchases such as a house, car or appliances; it will be much easier to get a loan if you have joint credit. Also, both parties are responsible for the debt, whereas with separated credit, each individual’s credit and debts are their own, and are not responsible for the other. There is an exception to this rule however, which is applied towards items purchased as family expenses.
Establish whether one of you has bad credit before entering into the relationship. If you are for separate financial accounts, discuss a method to pay bills and deal with other financial matters related to both of you jointly. You may opt to open a third joint account that is designated as the house account. Each member of the couple then transfers a set amount of money every month to this account in order to pay bills. Of course, the two of you will need to determine how much needs to be paid every month, and how much each person will contribute.
Ultimate budgeting tip
Forthrightness is what carries the day when it comes to dealing with each other about your financial weaknesses and needs. From the beginning, discuss a plan on how you will handle your finances.