Maintaining a successful long-term relationship, and continuing to thrive over the long haul, is a team effort. Both partners have to be all in, both emotionally and logistically. This goes beyond divvying up household duties and co-parenting: one responsibility that’s easy to forget about is balancing love and money by managing your joint finances.
There is no ‘best way’ for couples to manage their money—it depends on what works for you and your significant other. Some may feel most comfortable merging all their funds into joint checking and savings accounts, while others prefer the autonomy of separate debit and credit cards. The truth is that both approaches can work, but no matter the option you choose to use, some financial details are indeed intertwined when you’re a married couple.
Commingling Your Credit
When newlyweds say “I do,” they’re uniting more than just their families; their debt also comes under one new umbrella. In other words, your credit score no longer stands alone. Whether you’re applying for a mortgage, an auto loan or any other type of financing, lenders will look at your overall financial health, which includes your spouse’s credit score. Having the money talk with your partner doesn’t have to be complicated. If you haven’t already done so, sit down together and put your credit history and current debts on the table. This way you’re both on the same page. And if there’s any credit repair to be done, you can make a plan for tackling it together.
Learning to Budget Together
An effective budget is really nothing more than a financial game plan that both partners create together. Lead with laying out your joint income, followed by the monthly expenses you have both together and separately. For instance, your mortgage or rent payment would be a joint expense, while your weekly happy hour date with your best friend may be considered an individual spend.
Once you see everything in black and white, communicate openly and honestly to come up with a monthly budgeting plan that works best for the two of you. Some couples may prefer separate checking accounts but joint savings accounts; or you might like the idea of using your spouse’s income to cover housing expenses while directing yours to a checking account designated for other bills. At the end of the day, the best option is up to you, but the point is that ironing out the details should be a joint activity—not something that one partner decides and then dictates to the other. Financial knowledge is the foundation of financial empowerment, so no one should be in the dark here.
Planning for the Future as a Team
Equally managing your money also comes down to talking openly about your individual financial goals. Your spouse may be dreaming of traveling the world after retirement, or maybe you’ve both got your sights set on saving a down payment for a new home. Communicate freely about your big-picture dreams, then strategize as a team about how you’ll get there. Building a reliable nest egg that will see you both through retirement doesn’t happen overnight. Instead, it requires getting on the same page as your partner early on so that you can begin taking steps to get there—and, hopefully with as little stress as possible.
Whether it’s coming up with an investment strategy, a debt payoff plan or a monthly budgeting approach, the most important thing is that you are doing it together. If one partner doesn’t have a strong foothold in their finances, what will happen if he or she comes up against an unexpected death or divorce down the road? In the blink of an eye, they may be left to manage their finances on their own.
If making an effective plan feels like tricky terrain, a CFP® professional can help you and your partner clarify your goals and get on the right track together. Communication is key. From there, it’s about managing your money as a team.
