The deeper into a relationship you get, the more important talking about money and combining finances with your significant other become. So romantic, right? But if you and your significant other decide to move in together, or get married, then a conversation about combining your finances is natural. A joint account is a shared responsibility, and—if something doesn’t work out—possibly one with lasting repercussions. Exhibit A: Nearly one-third of adults with partners say money is a major source of conflict in their relationship, according to a survey by the American Psychological Association.
Even though you’ll be sharing with the person you love, there’s no need to rush into a joint bank account without getting on the same page. Make sure you and your partner have a deep conversation about your finances first so you know it’s the right choice. For both of you.
Not sure how to break the ice and talk money? Try these four topics to get the conversation going before combining finances with your significant other:
1. What’s the financial situation?
Most people don’t talk openly about the state of their finances, except perhaps with a financial professional. As relationships develop, however, it’s important to be realistic about both partners’ finances in order to establish equal footing. This is one time when you don’t want personal finances to be too personal.
Consider sharing your credit scores, and understand if either of you has debt that would be taken on by the other upon combining your finances. Discuss each other’s attitudes and willpower when it comes to spending—and saving. All of this can help give you a clearer view into how you may function together to manage your money. You may even learn a thing or two about your own financial approach in the process.
“Combining finances can even improve money management because it opens up the lines of communication between partners,” says Lauren Greutman, author of The Recovering Spender and founder of LaurenGreutman.com.
2. Will you have joint and separate accounts?
Many couples choose to have shared accounts while maintaining individual ones. If you decide to open a joint account, think about whether you want to open just a checking account, or if a shared savings account meets your goals, too.
With multiple accounts of any combination, it’s good to break down how each will be used. Know which accounts receive paycheck deposits, for example, and how the shared account will be funded. If a joint account is for shared bills (rent, utilities, food), decide how bills will be paid. Do both parties transfer money into the account to cover bills as needed, or is there an amount deposited automatically with each paycheck?
What about other joint expenses, like vacations? Will you fund your retirement with a joint account, or will you go solo on that venture? It’s best to get these questions answered before you combine finances with your significant other to avoid confusion or disagreement down the road.
3. Who manages the joint account and what are the “rules?”
If you choose to combine your finances and open a joint account, it’s important to discuss how it’s managed and by whom. Nobody loves rules, but establishing each person’s responsibilities with your joint account can go a long way toward avoiding future conflict.
Let’s say you open a joint checking account for shared bills. While you may both deposit money into the account, you could consider putting one person in charge of making sure those bills get paid. Maybe the other person is responsible for ensuring the balance statement is correct each month.
Additional rules can also help avoid unnecessary arguments and impulse purchases. Maybe you commit to discussing purchases when they are over a certain dollar amount.
“My wife and I set a limit each week on how much ‘spending’ money we each have for things we like to get ourselves,” says John Rampton, Founder and CEO of the online digital wallet, Due.com. “Giving each other an allowance means we cut out arguments on what we spend that money on.”
4. How will you deal with problems along the way?
Having a clear view into your joint finances doesn’t mean there won’t be hiccups here and there. It just means you may know about them sooner rather than later, and you’ll know how to address them with your partner. If, for example, you don’t have enough money in your account to cover bills, having a plan as a team can help.
“If your money is combined, you have to talk about it because of the risk of overdrafting the account, not having enough money and about future plans with where to spend the money,” Greutman says.
If you notice your joint account is trending low on funds, sit down and go over your joint budget. See if there are areas that can be adjusted. It might mean economizing where possible or increasing the amount going into the shared account. Either way, talking through the situation will help you come out ahead each month.
Communication is key
Combining finances with your significant other is a big step in any relationship. Even if you decide to keep your finances separate for now, you will have an easier time talking with your significant other about your financial needs. If you do decide to open a joint account, being able to communicate will allow you to pick an account that will help meet your shared goals.
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