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The dos and don’ts of combining finances with your partner

Are you not looking forward to the “money talk” with your partner? There are no hard and fast rules, but here are some tips to make the transition easier.

couple embracing on sofa

The proportion of adults who cohabit with their partners is increasing.

Maintaining a healthy relationship with your partner can be tough. Throw money into the mix and it can make or break your financial life.

There is no fixed formula for how you should combine finances with your partner. However, we have some do’s and don’ts from relationship and financial experts on how to navigate shared finances in a relationship. Plus, we offer some scenarios for pooling finances that have worked for couples just like you.

In this article:

“Do’s” for combining finances

Do: Address your concerns ahead of time

Being open and transparent plays a big role in any difficult conversation. Especially this one. Be honest with your partner about your concerns. Write them down and encourage your partner to do the same. Then have an open discussion about each of your concerns and consider potential solutions.

Don’t be afraid to ask the tough questions. How much do they earn? What if you break up? Does he or she have questionable money management techniques? Addressing your concerns is not a way to beat your partner. Try to find solutions to make it work for both of you.

Do: Discuss which accounts you will combine

Are separate bank accounts or combined accounts better for you? This answer varies from couple to couple and depends on where you are in your relationship and financial life. The short answer – you have to do what’s best for you.

For some couples, that means keeping separate finances, but also having a shared account that each can contribute to. Joint accounts like these should be used for shared expenses such as rent, mortgage, utilities and groceries.

If you decide to combine finances, both you and your partner will have access to the funds, such as a joint checking account. This means that both of you can legally withdraw the money and spend it on whatever you want. You are also both responsible for any debts incurred on the account and there is the potential to affect each other’s credit ratings.

Do: Create a debt repayment plan

Stress around debt can cause serious problems in a relationship, so you want to try to eliminate it where possible.

Start by having an open and honest conversation about your debt and come up with a financial plan. Ask questions like how much debt do you have? What are the monthly payments? How high are the interest rates? You may not be able to pay off all of your debt at once, such as student loans, but you can start by eliminating smaller debts such as credit cards.

What if your partner carries the majority of the debt? Again, this answer will be subjective to you as a couple. You may want to do everything you can to help your partner financially. However, it is important to be realistic about the support you can offer. Communication is crucial. Brainstorm ideas on how to help the other person get back on track and provide emotional support where you can.

Do: Create a budget

How much is “too much” when it comes to your spending habits? Create a budget to guide you and your partner. This gives you an idea of ​​what a merger of your finances will look like. Gabriel Kaplan, a CFP® and CPA in New York City, told Money Management International that he and his wife “agreed on a savings rate, deducted from our living expenses, and then allocated what was left over to ourselves … Things and things have worked out because we stick to our budget and we both trust the other person to be in charge.”

Create a budget for the first two to three months. Include groceries, rent, household expenses and date nights. Find out how much you can typically spend in a given month or week. This gives you a realistic snapshot of where the majority of your money is going and how much you should be saving. Set a budget and use it for the first few months, then adjust as you go. Don’t feel limited by your budget, instead use it as a guideline for spending.

A budgeting app can help you save money and track your expenses as a couple.

Do: Start an emergency fund

Building an emergency fund should be one of your first financial goals together. Throughout your relationship, you will most likely encounter unexpected expenses. One of you may lose your job, major home repairs may occur, or health issues may arise. An emergency fund exists to help soften that blow.

It’s a safety net of cash that will be used for emergency expenses so you don’t have to take on any debt. A good rule of thumb is to save around 6 to 9 months of living expenses.

Be sure to put this money in a separate account so you don’t feel tempted to make a withdrawal. Consider a high-yield savings account so your money can earn interest over time. Try to top up your money as you spend it and only use it for emergencies.

Do: Save for retirement

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About Tom Anderson

Tom Anderson is an award-winning financial journalist whose work has appeared in CNBC.com, Kiplinger’s Personal Finance, Money, Eyeglass and Wire bound. He was a 2008-09 Knight-Bagehot Fellow in Economics and Business Journalism at Columbia University.

Read more by Tom Anderson

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and overall well-being can be refreshingly simple.

Our editorial policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and overall well-being can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they fit your situation.

Haven Life is not authorized to provide tax, legal or investment advice. This material is not intended to provide and should not be used for tax, legal or investment advice. Individuals are encouraged to obtain advice from their own tax or legal advisor.

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