If you’ve always been a financially independent woman, one of the biggest adjustments to married life may be all about money. While some married couples continue to lead separate successful financial lives, it is a good idea to investigate merging yours and your partner’s finances. A merge will allow you both more options to implement a strategic money management plan.
However, you and your partner may have opposing ideas about how a merge should look. This discussion can be a surprising relationship minefield! You can minimise some frustration by heeding some of the following advice as you consider how and if to combine finances.
Decide on the right time to merge your finances
The timing of a financial merge may largely depend on where you are in your relationship.
If you are just seriously dating but not yet ready to take it further, you may only want to familiarise yourselves with each other’s financial habits. This is probably not the right time to rush into a merge, but you could start opening up about the basics of your finances.
If you are planning to get married, this is definitely the time to offer full disclosure of your accounts. Even if you are planning on holding on to individual accounts in the future, you still need to address the details of each other’s finances in order to identify common goals and come up with a plan on how to reach them.
Once you move in together, you need to discuss how you will pay for shared expenses such as mortgage, electric bills, gas bills, water bills and groceries. A 50-50 approach might be the first to come to mind, but it may not be the best strategy (especially if you have widely differing incomes). You may want to consider each contributing a fixed percentage of income so as to split things proportionally.
Are you planning to have kids in the near future? Bringing another person into your relationship sparks a whole new dynamic in your financial setup. Be prepared to start collectively saving up for childcare and education. Aside from that, discuss with your partner how you can instil good financial values in your kids.
Share the cornerstones of your financial situations.
Once you have decided that you want to merge your finances, it’s time for the nitty-gritty. Sit down with your partner and lay out all the details of both your finances. This may take some time so try to set specific appointment dates to discuss specific money matters.
Talk about both of your salaries, bonuses and other sources of income, along with your debts and other large expenses.
Talk also about your financial priorities and goals. There are certain to be some that you share! Are you more interested in having meaningful work, perhaps less well compensated, than a big paycheck? Does he like to put some money towards leisure trips abroad? Are you saving up for a house or a car? Do both of you dream of having a large family? Map out where you stand on financial issues such as those impacted by career paths, investment philosophies and family matters.
In addition to financial hopes and dreams, tackle your hang-ups and fears. Are you struggling to suppress your urges to splurge on shopping and dining out? Is he worried about incurring debt?
Find a strategy that suits both partners’ needs.
There are many ways to merge your money. One way to do it is to do it across the board: combine your bank accounts, share credit cards, and help each other pay off mutual debts that came along into the marriage. This may be one of the simplest ways to merge your finances, but it requires lots of willingness to compromise and mutual trust.
You can also do a partial amalgamation of your accounts. For example, one joint savings account can be the deposit account for a percentage of your and your husband’s salaries. A joint checking account can be the repository from which you pay for shared expenses. A joint credit card account can facilitate payment of groceries, entertainment, dining out and vacations. A joint investment account is great for saving money for big purchases like a new home or car. You can always open individual accounts if either of you feel the need to have money on hand for personal use.
After you decide on your financial strategy, work out the logistical details. How often and when will you plan to sit down and check on your finances together? Who is in charge of sending the payments for the bills? Agree now on how to divvy up responsibilities to avoid conflict further down the road.
Keep your cool.
No matter what strategy you implement, there’s bound to be some bumps along the way. When you do encounter obstacles, remember to keep your cool. Are you having a disagreement about spending habits? Do you have a lot of differences in how you value money? Is one of you less committed than the other to meeting financial obligations?
Try not to discuss a thorny issue in the heat of the moment — it’s more productive to discuss it when both of you are calm and rational. Communicating your needs and concerns in a loving and non-threatening manner is often the best way to avoid hurting each other’s feelings.
This article was first published in The New Savvy.