For Better or Worse: Should Couples Combine Finances?
Nonprofit credit counseling agency Take Charge America highlights eight issues couples need to discuss before blending finances
PHOENIX – (Feb. 5, 2015) – To combine finances or not to combine finances? It’s a question most couples consider as their relationships get more serious. The answer; however, is not so simple.
“In the not-too-distant past, couples didn’t think much about combining their finances. After marriage, they would open joint bank accounts, take out a mortgage and share all the income and expenses,” said Mike Sullivan, director of education for Take Charge America, a national nonprofit credit counseling and debt management agency. “Yet things have changed. Today, it’s more common for both partners to earn incomes and to bring debts and assets to a relationship, making the process much more complicated.”
For couples considering combining finances, Sullivan suggests eight issues that should be a part of an open dialogue:
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Communication: Money is consistently cited as a primary source of conflict between partners, so it’s best to establish open communication early on. Set aside a block of time that works with each person’s schedule, and establish ground rules for effective communication.
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Review the numbers: With a foundation of trust and honesty, take stock of your financial situation. Discuss your income, savings, retirement accounts, student loans, credit card debt, credit scores and history, and other assets and expenses.
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Compare spending habits: Take a close look at your spending habits before you combine your money. Is she a spender or a saver? Does he use cash only, or does he tend to buy on credit? This can be a real eye-opener, particularly if you grew up in families with dramatically different financial philosophies.
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Create shared goals: Sharing a life together means aligning the goals for your relationship – including finances. Determine long-term financial aims for your relationship – whether or not you want to buy a new house, travel, invest, etc. It’s also important to set goals for paying off debt, building your emergency fund and saving for retirement.
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Write it all down: Create a comprehensive monthly budget that includes your income and all household expenses, including your mortgage or rent, utilities, car payments, insurance, food, savings and entertainment. Make sure you agree on how the funds should be allocated.
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Decide who pays for what: Many couples enter a relationship with two very different incomes. Whether or not you merge finances, agreeing on how you will divide up the household expenses can head off a lot of resentment, arguments and mistrust.
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Think twice before cosigning: Carefully consider whether or not you should share debt such as student loans, auto loans or credit cards. If the relationship ends, you’ll be equally responsible.
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Agree to discuss big expenses: You can avoid a lot of relationship headaches by agreeing to make big financial decisions together. Discuss any purchases that exceed a set amount – $100 or $1,000, for example – to make sure you agree it’s worthwhile to purchase.
For more financial tips, visit the Take Charge America Education Library.
About Take Charge America, Inc.
Founded in 1987, Take Charge America, Inc. is a nonprofit agency offering financial education and counseling services including credit counseling, debt management, student loan counseling, housing counseling and bankruptcy counseling. It has helped more than 1.6 million consumers nationwide manage their personal finances and debts. To learn more, visit www.takechargeamerica.org or call (888) 822-9193.
