Marriages are about joining your lives, not segregating money-related matters. My wife and I have entered into a union, not a joint-partnership. We put all of our money into the same checking account and then decide together how we will spend/save/invest it. Roommates split bills, married couples are together for richer or for poorer.
You and your significant other are now under one roof! Not only are you sharing a bathroom and closet space, you’re also sharing rent, utilities, and grocery bills. Combining finances with your partner brings together money and love—and truth is, both are emotional subjects.
So, to keep things calm as you make the transition, it’s a good idea to decide on ground rules before you face a disagreement. Here are some tips to get started bringing your finances together.
Rule #1: Create a System
By establishing ahead of time where the responsibility lies for each expense, you’ll eliminate the potential for misunderstandings and overreactions when bills start coming in. Figure out which costs should be considered joint, and which you or your partner will handle individually. I consider a joint expense anything you both use together (rent, utilities, cable, Internet, groceries, and insurance). Set up an account that the two of you share, and pay your joint bills with automatic debits from that account.
Your individual expenses include the things each of you pay for on your own: shopping, hobbies, credit cards you opened before you got together, and eating out separately. That said, consider setting up your joint and individual accounts with the same bank or credit union. That way you can easily transfer money into your combined account on payday.
Rule #2: All’s Fair in Love and Budgets
You and your partner probably don’t make the same salary, so one way to even out your joint expenses is to contribute proportionate percentages of your income toward your shared budget. To decide how much each of you should contribute, first total the monthly expenses that will be coming from your joint account. Divide that number by the total of your combined monthly income. The resulting percentage is what each of you will contribute from your earnings.
For example, if your expenses come to $2,000 a month, and your combined income totals $5,000 per month, you would each contribute 40% of your salary (2000/5000 = 0.40). If your income is $3,000 of the $5,000, and your partner’s is $2,000, then you will contribute $1,200 to the joint expense account while your partner contributes $800.
Rule #3: Set Financial Goals Together
Once you’ve categorized your expenses and have a proportionate budget in place, it’s time to start setting your joint financial goals. If one of you is better at balancing the checkbook and making sure bills get paid on time, that person can be the one in the driver’s seat when it comes to handling those tasks. But you still both need to be on the same page when it comes to budgeting and saving. Set up your accounts on Learnvest or Mint.com, so that each of you can log in to review the breakdown of your financials.
Talk about your goals, too. Are you saving for a wedding or a down payment on a home? Do you have a dream vacation coming up? How do both of your retirement accounts look? Make sure you’re using the websites above to track your savings progress, too.
Rule #4: Communication Is Key
Many couples have completely different spending habits and attitudes toward money, and that can lead to serious misunderstandings. You may be a spender, while your significant other might be a saver. In order to keep the peace, have a monthly budget meeting (just like at work—only this can be more fun, perhaps over dinner or drinks). Review where you may have overspent, where you found some additional savings, and most importantly, how you’re doing on your financial goals as a couple.
Come to the table prepared to look for solutions to any problems that pop up (instead of pointing fingers or casting blame). If one person has completely blown the budget, rather than fight about it, figure out how you can adjust next month to make up for it. Especially at first, your combined budget (and practicing talking about it) will be a work in progress.
Over time, you’ll learn how each other spends. Even if right now your methods of managing money and your spending habits are very different, they will likely begin to complement each other as long as you communicate in a positive way. If you’re the saver of the couple, remember it’s not always best to save every penny if it means you don’t get to live a little. And if you’re the spender, keep in mind that frivolous purchases can push you farther and farther away from your other financial goals. Keep each other in check and the checkbook balanced!