Merging finances is NOT easy, and it’s also not instantaneous. I know a client who took almost a decade to merge their money – it was a second marriage for both of them and they were very cautious.
You will never agree completely with your partner on how to go about things. Here are the six things that new couples confront when looking at how to manage and organize their money:
Merging Money. Should you merge everything you have and earn into one joint account, or should you maintain individual accounts and open a joint one for household expenses?
Couples run into trouble not necessarily when they are not in agreement—but when they start reading into what the lack of agreement means. There are many different ways to merge your finances as there are couples in the world, so don’t get thing up on how you believe things should happen.
Tactically, most people have a joint account as well as a separate checking per person. Over time, expect more and more will be paid from the joint account.
Dealing With Debt. One of the worst things about coupling is feeling like you’re dragging down the relationship with debt—which can feel even worse if your partner comes into the union debt-free. Whenever debt enters the relationship, it’s good to remember that no one is infallible—the debt is not a way to keep a “scorecard” in the relationship. People in mature relationships accept that solving the debt as a team not only strengthens the relationship, but helps reduce the debt more quickly.
And – don’t focus on the debt to the exclusion of all other joint goals. You might feel great being out of debt faster, but what if it means that you can’t buy a home for that much longer? You have to balance personal goals with the greater good.
Managing Spending. In many relationships, one gets labeled the “saver” and the other gets labeled the “spender.” Labels and categories can do real injustice to an in-depth, multi-layered relationship, and they never serve to make you feel closer to your partner. And it may not even be true: traditionally, women usually take care of most of the family’s daily expenses: the groceries, the bills, clothes for the family, while men spend on large purchases like mortgages, cars payments or home equipment. The spending amounts to roughly the same, it just played out differently based on the person. They key here is to remember that you’re simply trying to avoid surprises, which ongoing clarity over your spending goes a long way toward fixing.
Investing Wisely. Over many years, evidence states that men are more willing to take financial risk than women (but recent studies show women are better investors!). However, investments are a secondary argument. The biggest money problem is achieving agreement and understanding of how specific buckets of money will be used in varying timeframe—or how I like to ask, “which money will be used for what–?” Once a discussion of goals and timeframes are clarified for different accounts and sums of money, it becomes much easier for couples to align themselves with common goals and objectives.
Keeping Money Secrets. Let’s face it; most of us have trouble not lying to ourselves, let alone other people. Lies about what we ate, what we spent . . . this is one of the fundamental challenges of a relationship, to be vulnerable and transparent in all areas (and not letting your own shame and money secrets degrade to such a point they damage you and the people around you!).
If you knew that lying about how many books you downloaded on Kindle, even once, would lead to a less authentic, open relationship with your spouse, would you do it? Probably not. Each partner must keep in mind that most relationships aren’t destroyed by one dramatic act, but a series of small, even individually inconsequential acts that chip away at your foundation of love and trust.
Emergency Planning. Just like couples vary on the degree of risk they are willing to take, they also vary on the level of reserves they need to feel safe. The key here is to find the commonality; both partners typically agree that some level of cash reserves makes sense, so where is the middle ground?
Once a budget is clarified, issues of emergency savings become secondary, since some level of savings has already been allocated within the spending plan. It helps to remember if there actually is an emergency, you’ll be distracted with supporting one another—and NOT worrying about how to spend the reserve!
With honesty, open communication and a willingness to look at your finances objectively, couples can avoid becoming stuck on these money issues, and move forward as a cohesive team.
And be sure to get my library of resources, which can help you work on these areas as a couple!