There are so many questions that need addressing when a couple decides to share their finances. Talking about this in advance is crucial because things can get ugly very quickly when money becomes involved. That is why we are going to analyze five things to consider when managing money in a relationship.
Shared Accounts?
If you have decided to get married or share your finances with another person, you might opt to have a shared account. You need to be aware that the risks are enormous, and may outweigh the benefits.
By pooling your financial resources, you may be able to achieve things that you can’t afford individually, like buying your dream house. It is crucial that you both agree upon these goals. You might be head over heels in love with each other, but if you do not have similar visions of what you are saving for and how you should treat your money, you should avoid having a shared account.
One of the potential risks of having a shared account is that one partner might feel that he/she is contributing more and spending less money from that fund. But, if those disparities are subtle, your love should be enough to overcome them. There is one more way to solve this, and that is how we come to the second thing you should consider when managing money in a relationship.
Individual Bank Accounts
While having mutual financial goals should be one of your priorities, that doesn’t mean that you can only do it through the shared accounts. Many couples do better when they each have their own accounts. That usually functions so that both partners put the same amount of money in their mutual budget, and the rest of their finances remains on their individual current accounts. Psychologists say that this approach benefits the relationship. Keeping your individuality is important in a relationship, and this is one way of expressing yours.
Some people don’t feel comfortable sharing details about every single dime they spend, even though they do not have anything to hide. Individual bank accounts allow that and so much more. They are also suitable for having so-called discretionary funds, meaning that both partners keep a certain amount of money on their accounts to spend on whatever they want. For instance, if you and your partner decide that you both can spend 250 dollars per month on non-essentials like clothes, sports equipment, make-up, or dinners with friends, it will be easier to do it if you have individual accounts.
Who Pays for What?
Moving in together is a big step every situation is a compromise – from picking the best home to share to choosing the moving company to get you and your belongings there. In both of these situations, it is crucial that you find the best possible help so that your dreams do not turn into nightmares.
Setting up the rules early in your relationship will help you avoid many problems and misunderstandings afterward. The same goes for finances. Discuss who should be responsible for:
- paying your monthly rent and communicating with your landlord when necessary;
- paying utilities on time and keeping records on them;
- making sure that your insurance costs and retirement accounts are settled;
- your home and your cars maintenance costs;
Dividing your financial responsibilities should be no problem if you are both honest and responsible. Sharing bills, mortgages, and obligations between partners often makes the relationship stronger.
Deal with Your Budget Regularly
Money problems can appear at any time in your relationships, and if you neglect them, they can easily tear you apart. That is why it is essential to talk about them before they appear or while they are still small. Budgeting is not the most exciting subject among people in love, but it is undoubtedly an important one.
Bear in mind that setting some rules about your finances at the beginning of your relationship is not enough in itself. Checking in with your partner regularly is even more important than having a strict schedule about who pays for what and how much you spend on your hobbies. Discussing your current financial situation should be a weekly habit because problems are easily solved when addressed early. If you find that too boring, you can make it a special night; for instance – make your budgeting night a pancake night at the same time, or agree to discuss your finances on a night when you usually get take-out food.
If addressed frequently and honestly, savings and banking issues don’t take too much time or effort. The changes in spending habits can also be indicators of other things, which you’d better discuss sooner rather than later.https://youtu.be/2D3tzZNlH7w
Consider Getting Professional Help
Some financial disagreements are normal in a relationship. When people decide to start living together and share their finances, they might feel like they are putting too much at stake and might be anxious about it. Or, they might feel like they will let their partner down for not handling the finances the right way. The best way to solve such issues is to hire a professional. Financial planners are there to inform you and help you deal with your finances more efficiently. They can hear you out and suggest the best possible budgeting plan for you as a couple, whether you need help figuring out life insurance policies, Retirement Planning, or your grocery shopping habits.
Finally…
If we tell you that money issues are the second most common reason for relationship failure (right after infidelity), you will understand how important of a role it plays in a partnership. Being open about your financial status and future goals with your partner is a good starting point for combining finances and managing money in a relationship. Of course, honesty is a two-way street.
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