You get the best of both worlds when it comes to your significant other - love and managing finances together. Whether you are married or a long-term couple that is planning on taking the giant leap on combing your finances, there are a few things to keep in mind.
Here are healthy ways in which you and your partner can combine your finances successfully without having it drive a wedge between your love.
Before we start
Every couple is different. Whether you choose to combine your finances or keep things separate, be honest with each other. These financial tips are basic guidelines but should not be taken as financial advice. We encourage you to speak to a financial advisor who will be able to advise you on your situation.
Plan around each person’s finance
Combining finances requires that you both be open and honest about your finances. This means fully disclosing your income and expenses. It will also give you a clearer picture of how much each person should be contributing to make it fair for everyone. One person could be handling most of the expenses if one partner earns more than the other. However, the responsibilities should be split into what each person can manage.
Are you planning on going all-in?
When it comes to finances, it is better to never assume that you are on the same page. Therefore, make sure that you discuss thoroughly what combining finances mean for you. There are many ways that you can combine finances:
Combining everything. This means that you will have a joint account for all your finances - savings, monthly expenses, paying off debt, and future investments. Clear communication will be needed, especially if one of you is planning on making a major purchase that can impact your finances.
Focusing on expenses. You will still have separate accounts for your personal expenses but may want a joint account to handle daily living expenses or monthly expenses such as rent & utilities.
Major purchases. Two incomes are better than one and it can make more financial sense to combine your finances when looking to create an emergency fund or planning on making major purchases such as buying furniture, a home, a car or shares. You will need clear guidelines and a discussion on major purchases as this can have a major impact on your finances.
Planning for your future. Protecting each other financially is something many couples consider. This could be in the form of having a streamlined account that focuses on paying for things such as policies, investments, and retirement plans that can protect your financial future.
Creating a debt repayment plan
Being financially responsible as a couple also means discussing any debt a person may have. It can help both of you pave a way forward together and seek financial counselling that can benefit both parties in the long run. It will also reduce the chances of one partner plummeting everyone's finances into more debt. Have a plan on how you will take care of small and big debt.
Create a budget together
Having one person juggle and control the finances can lead to financial abuse or financial cheating. It is possible for one person to be better at financial management, but that doesn't mean that they should not involve their partner. Take time to plan the budget together so that everyone is on the same page. It will also create a relationship of trust when it comes to your finances.
