You’ve made the commitment. You've moved in with each other or said ‘I do.’ So, what comes next? Figuring out who's going to pay for the Netflix subscription and who's going to buy the Ben & Jerry's, of course. Merging finances isn’t the most romantic part of taking the next step in your relationship, but negotiating how to handle money as a couple could just be the thing that helps you stick together. After all, studies show that money is one of the top things that couples fight over and a key predictor of divorce.
HAVE A HEART-TO-HEART ABOUT MONEY
Let's be honest, we all have strong beliefs about money. Some people are dedicated savers because their parents never knew where the grocery money was coming from, and some people like to spend because they were forced to wear hand-me-downs their whole childhoods. If you didn't have a money talk back when you were staying up all night swapping stories about each other's favorite movies and most embarrassing high school memories, now is the time.
Share what money means to each of you and how you manage it. Talk about any savings, assets or debt you have. Do you have good credit, or did you ruin yours? (If one of you has bad credit, you may not want to merge finances.) Lay it all out on the table. Once you have an idea of your current financial picture as a couple, start planning your financial goals together. Want to buy a home together? Travel the world? Get out from under your student loan debt? Create a list of goals.
BE THE COUPLE THAT BUDGETS TOGETHER
Once you have an idea of your financial landscape, you're ready to craft a budget together. That could be difficult since the season tickets for the opera or to the local football games one of you always buys might not fit into your five-year plan to buy a condo.
If you have opposite financial philosophies, make sure there's room for the big spender to splurge a little and that you're saving enough to make the saver feel secure. Also, include things like an emergency fund, debt repayment, retirement savings and money for fun things like vacations or date nights in your budget. After all, you should still be able to go see Carmen or the home team play every once in awhile.
DECIDE ON YOUR ACCOUNTS
Your parents might have put everything into one bank account that required both of them to sign for things, and maybe that’s right for you, too. But it doesn’t have to be. Maybe you just moved in together, and you're not ready to be going over each other's credit card statements every month yet. Or maybe you can't imagine not having a little fun money all to your own. There are lots of ways to split things. That may include keeping separate accounts, putting everything together or some combination of the two.
The point is to talk through what makes sense for your situation and make sure you talk about how you’re splitting up costs if you don’t merge accounts.
KEEP THINGS FAIR
Whatever you decide to do, it’s still important that you keep the distribution of expenses fair. Perhaps for you that means sharing costs 50-50 or that you both contribute $2,000 per month towards household expenses. But if one of you makes significantly more than the other, that could lead to problems down the road with one person feeling like they have less personal money to spend as they see fit.
Some couples each contribute a percentage of their income to mutual expenses each month. That percentage could be the same for both people or the person who makes more might chip in more. Fairness can be a very subjective idea, so it's important that you talk through the solution in order to make sure that you're not feeling put out that you're the one paying for the toilet paper and the spaghetti sauce every week. Communication is what a healthy relationship is all about.
Share what money means to each of you and how you manage it. Talk about any savings, assets, or debt you have. Lay it all out on the table.