Okay you did it! You got hitched OR you’re headed in that direction. It's time to start thinking about merging the monies!!
Before you turn a blind eye or get into any sort of conflict. Have a meaningful conversation with your honey about how you see your financial future together.
I have outlined for you three easy ways to make sure this transition in your life goes smoothly for you and your beloved.
TIP ONE - PAST: GET IT ALL OUT IN THE OPEN
Time to get real and lay it out on the table. Remember you love each other so even if you feel shame about past decisions or situations, it’s better to be honest about where you stand with your finances.
Going through this with your significant other can actually be very healing.
Learn your significant other’s goals and values around money, spending, saving, investing, etc. Understand how they like to track their finances and what new methods, if any, they are open to.
Share your past financial happenings, debts owed, obligations, past bankruptcies, credit scores, etc. and how you plan on remedying them either together or individually.
After you’ve discussed your past and where you stand today, you can successfully make a plan for moving forward.
TIP TWO - PRESENT: TO JOIN OR NOT TO JOIN?
Should you establish separate or joint checking, savings, and credit card accounts?
Also, some people think its only bank accounts that need to be considered when merging finances. I recommend weighing the pros and cons of pooling health insurance coverage and other services like mobile phone plans or auto insurance plans, where you might receive a discount for multiple accounts.
Joining any or all of these will ultimately be up to you and your partner and what works best for your relationship and goals.
Also, discuss when will you JOIN in your decision making and when can decisions be made separately? Some couple discuss every purchase. Others only when it is over a certain dollar amount or when it has a certain impact long term.
Next, join together in deciding how day-to-day finances and financial documents will be handled and archived. That way no one is guessing or feeling lost.
I recommend having a shared master budget and deciding if you want all shared expenses and bills to come out of a joint account or separate accounts or some combination of the two.
Finally, answer the question... will all income go into this shared account or only a percentage and from whom?
Now that you have your joint budget and how day-to-day finances will be handled it's time to tackle the future.
TIP THREE - FUTURE: RETIREMENT, INVESTING AND ONGOING SAVINGS
With all three of these tips, and especially with this one, I highly recommend hiring a financial planner to be a neutral party in your financial discussions.
You will want to prepare your short-term and long-term income and retirement goals together, so you know how to effectively maximize your income and any retirement plans provided by your employers. So cool to know the power of your incomes combined will be at work!
You will also want to have a plan in place for emergencies or unexpected expenses. I typically recommend a six month cash cushion for essential expenses. This is where knowing your day-to-day budget from tip two will come in very handy!
Tension can rise if there is a tightness or financial pressure, making sure you have a nice cushion in place will alleviate conflict in times of emergency or loss.
Have fun too! Explore your dreams and the kind of lifestyle you want to live together. Create a savings plan that will make your dreams come true. With some forward thinking and a little planning, it is possible to buy the house or go on the luxury vacation or anything your hearts desire.
Again, with all of these tips its best to have a neutral party, such as a financial planner, to take the emotion out of the equation as much as possible.
I know these conversations can be uncomfortable, especially at first. However, if you grow this muscle with your honey in the beginning of your relationship, you will have much more success in your connection and the conversations will get easier and easier. It is far better to be on the same page and have some uncomfortable moments than to have your head in the sand or major conflict, not to mention, financial hardship later down the line.
I also have to say, if you made to the end of this article you are leaps and bounds beyond most couples out there. It takes courage, awareness, and a deep caring for yourself and your loved one to even look at all this money stuff. So kudos to you my friends!