I am now over 30 years old and as such, I've become very familiar with going to weddings, engagement parties and house warmings etc. With all the gifts and travel for these gatherings, I have spent a small fortune to drink free beer! What all of these celebrations have in common, is two people deciding to merge their lives together. And I know that part of sharing your life with someone includes living together and sharing financial responsibility in one way or another.
With money being one of the main reasons for divorce, there’s no reason not to get ahead of the curve and have financial conversations from the beginning of a relationship.
Talking about finances should come just before talking about marriage or even living together. Sure, Its not very romantic, but its necessary and doesn't have to be painful. Talking about your finances in a more relaxed setting like over a glass of wine or two or three is one way to make them less formal. You should be having financial discussions on an ongoing basis, so you really don’t want them to be stressful.
Here are our best financial discussions to have with your partner before you move in together or get married to get you started on the right foot.
5 Financial Discussions To Have With Your Partner
1. Your current financial status
Talk about your current financial status, including ALL your debts (credit cards, car loans – everything), assets, and anything else that is relevant. Knowing where you both stand financially is the first step toward creating a plan for the future.
2. Financial goals for the future
Discuss your long and short term financial goals. This includes talking about your savings and spending goals, in addition to buying a house, retirement, investments, insurance, and health care. This is a good time to talk about whether you want kids and the finances relating to education and daycare. Deciding what you would do if a family member asked for financial assistance is another way to see if you’re on the same page with your finances.
3. Bank accounts – joint, separate, both?
Decide how you want to combine your lives financially. The traditional way of combining finances is to have all monies go into one account. The more modern approach is for each person to have a separate account and for there to be one joint account for expenses. Whichever method you choose (and there are several more than I mentioned and will cover in later entries), remember that separate does not mean hidden. So, even if you and your partner have a separate account, there should be complete transparency when it comes to those accounts.
4. Budgeting
Determine whether you will budget together and whether you’ll have weekly, monthly, yearly discussions to go through and revise your budget. Budgeting together is an effective way to set goals and a plan for the both of you as you begin to merge your lives.
5. Decide who will be in charge
Determine who will handle day to day finances, like budgeting and bills, and who will be in charge of long term finances. Maybe a rotating schedule will work for you. Maybe one of you is much better at being organized and keeping track of things. The point is to decide proactively who is going to manage the money. If both of you manage your finances together, set up times where you go over your finances to make sure you’re on the same page.
We have seen too many relationships be severely strained due to finances, So I hope that these tips can help you avoid this in the future.