Happily Ever After? 5 Things to Consider when Combining Finances
More money equals more problems? Not necessarily! If you feel ready to combine finances with another person, your ability to embrace the intimacy that comes with doing so is a positive step in your relationship!
Be prepared. These five tips can help!
1) Know Why You’re Taking This Step. Don’t combine finances just because you think you have to or because your parents did. If it’s at your partner’s insistence, acknowledge that and be sure you’re comfortable with it.
2) Know Yourself. Before combining finances, you’ll want to be completely sure of your own financial footing and your future financial picture.
Be an expert in the following:
- Credit card debt. What’s the limit on the card (s), when will they be paid off, and what are your balances and interest rates? When are the payments due?
- Student Loans, Auto Loans, and Mortgages. As above, what are the balances and interest rates? When will they be paid off? When are the payments due?
- Savings and retirement planning. Know your balances. Do you make regular contributions or piecemeal? Do you have goals or are you saving as much as possible, given your budget?
- Tough topics. Have you ever filed for bankruptcy? Are you worried about excess debt? Do you have a plan to pay off debt beyond making the minimum payments? Allow yourself and your partner to candidly discuss these topics before they have the potential to become a problem.
3) What’s Your Money Style?
- Are you a saver or a spender?
- Are you very organized or more relaxed when it comes to balancing your checkbook, budget, and awareness or your account balance?
- What are your partner’s answers?
- If your answers don’t match, it’s completely normal. Find what works for you. Shared accounts can bring a lot of peace of mind when these you discuss these issues upfront.
4) Divide and Conquer
Financial chores in shared accounts are just like household chores. Know the following:
- When it comes to paper bills (if you have them), who writes checks and mails them?
- Will the same person keep track of electronic billing accounts and payments?
- If you choose to keep and adhere to a budget, who will do that?
Which bank accounts and credit cards make the most sense to keep? Compare favorable interest rates in accounts and other benefits associated to determine if you should combine all bank accounts or only some. The same goes for credit cards. Once you streamline the process, check-in periodically to see that you agree the new system is working. You can always change any aspect of your plan together!