Managing money on your own is hard enough. Adding another person into the mix makes managing it even more of a challenge. Find out how you can tackle finances as a couple without putting unnecessary strain on your relationship or your wallets. Read these important tips below.
1. Talk About Money
You don’t have to talk about finances on the first date, but you shouldn’t wait until you’re hitting relationship milestones to broach topics like your current income, your debt and your spending style. You’ll want to know this information early on, instead of surprising your partner down the line. After all, their finances will impact you, and your finances will impact them. You’ll both want to have a good idea about what those impacts will be as soon as possible.
Don’t just have one talk about it! Keep discussing money in an open, honest and constructive way. Doing this should ease tensions on the serious topic so that you don’t deal with frustrating misunderstandings and fights.
2. Don’t Commit Financial Infidelity
Financial infidelity is a term that refers to a financial betrayal of your partner. It could mean keeping large amounts of debt secret from your partner. It could mean opening secret bank accounts and credit cards without telling them. It could mean gambling away money that’s meant for other expenses (for example, money meant for bills). Essentially, it’s hiding important or upsetting financial information from your partner.
Getting caught committing an act of financial infidelity could cause a huge rift between you and your partner! They could lose trust in you completely. In the worst-case scenario, this could catalyze the end of your relationship.
If you’re worried about broaching a difficult financial decision with your partner, don’t avoid them. Talk to them. If necessary, you can seek out assistance from a couple’s counselor. Having a trained professional as a mediator could help you resolve the problem without betraying your partner’s trust.
3. Get a Joint Account for Joint Expenses
Are you living together? Are you sharing household expenses? If you’re ready to share these financial responsibilities together, you just might be ready to share a bank account, too.
A joint bank account is a great way to manage your shared expenses, like mortgage/rent payments, utility bills and groceries. You can pool your funds into the account and use it to make any necessary payments and withdrawals. That way, you don’t have to carefully calculate your contributions for every single expense, and you don’t have to debate who owes who money for upcoming expenses. You’ll both have access to the spending pile.
4. Don’t Share All Accounts
If you’re planning on opening a joint account, do not close your other checking or savings accounts afterward. You’ll want to keep a bank account that’s just for you. Any extra funds that you have for personal expenses, like hobbies, clothing, grooming and gym memberships should be kept in your solo account. This is for you to use at your discretion.
Isn’t this a form of financial infidelity? Not if you’re upfront about this decision. You should also encourage your partner to keep at least one solo bank account for their personal funds.
It’s crucial that you maintain a level of financial independence during your relationship. You should still have the freedom to spend your funds as you wish, as long as it is not putting your shared livelihood in jeopardy. A solo account can also keep you from becoming vulnerable to financial abuse.
Abusive partners will sometimes control their significant other through their finances. It is easier to do when someone closes all of their solo accounts. The abuser can monitor their spending through the joint account and make sure that they can’t save for personal expenses. They can also make sure that they don’t have enough savings to remove themselves from their situation easily.
5. Share a Household Budget
If you’re living together and sharing expenses, then you’ll need to upgrade from a personal budget to a household budget. This simple financial tool will keep both of you on track with your household expenses on a month-by-month basis. It can also help you plan and reach your shared savings goals, like putting together an emergency fund or taking a tropical vacation in the summer.
If you don’t know where to start, download a budgeting app on your smartphone or computer right away. There are budgeting apps that are specifically designed for couples sharing finances, like Honeydue and Firstly.
6. Put Up Safety Nets
You should put up safety nets to help you recover from financial disasters. Without these safety nets, you could upend your entire monthly budget and cause a lot of financial stress—which could, in turn, cause unnecessary conflict in your relationship.
What kind of safety nets can you set up? One of the best safety nets to set up is an emergency fund. An emergency fund is a collection of personal savings that you can rely on when you’re hit with an urgent expense. You can withdraw the necessary savings from this fund to pay off the expense right away without having to worry about how you’ll handle your usual expenses. You’ll still be able to pay your bills as normal.
Without an emergency fund, you might not have enough in your checking account to cover an urgent expense out of pocket. You might have to look for an alternative solution, like a personal line of credit loan, to cover the expense. If you’re in that situation, you can go to a website like CreditFresh to see whether you meet all of the qualifications for a line of credit loan. With all of the qualifications checked off, you can submit an application online. You just might get approved for the loan.
With an approved loan, you can use borrowed funds to handle your emergency expense in a hurry. Once that’s over, you can focus on a repayment plan.
What other safety nets can you set up? Insurance plans can make for effective safety nets. Sign up for sensible insurance policies to help you recoup costs after dealing with disasters. For instance, if you’re renting an apartment together, you should sign up forrenters’ insurance. Renters insurance can provide you with coverage in the case that someone burglarizes your apartment and steals some valuables when you’re not there.
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7. Focus Less on 50/50
Splitting everything perfectly down the middle sounds like the best way to manage your money as a couple, but it’s not great in practice. What if your income brackets vary widely? Is it fair to ask your partner to cover half the budget when it puts a strain on their wallet and you have plenty of money leftover?
Sometimes, equal doesn’t mean fair. Splitting the financial responsibilities 50/50 is only an effective strategy when you have similar incomes and spending needs. This isn’t a realistic expectation!
You’ll want to finetune your budget so that it acknowledges your differences in income and spending needs, instead of divvying it up as a 50/50 responsibility. As your financial statuses change, you should adjust your budget to follow suit. So, if your partner gets a significant pay raise, they can contribute more. If your hours at work get cut, you’ll need to contribute less.
This will help you manage your finances better as a team and avoid fostering any resentment over budgeting.
Things like budgeting, banking and bill payments don’t have to be sources of tension in your relationship. Together, you and your partner can manage your money without stress. Follow these tips!
