I’ve said it before, but when it comes to combining your finances with your partner’s, there’s no “one-and-all” conversation. It is a continuous journey through past, present and future.
These conversations can be tough, and I’ll be honest with you: Sometimes they can feel like a chore. But when you work together as a team they are something you can accomplish faster and easier—and with fewer headaches. More importantly, these conversations are part of preparation for life together and with some good listening, they can bring you closer as a couple.
In our previous blog, we talked about the past, so let us now focus on the present.
The current discussion is about logistics: what you have and how do you manage it. From there, you’ll create a plan for getting in and managing your finances going forward.
Now, the current conversation may be the most uncomfortable of the three for you. After all, we are taught at an early age not to discuss money. You may have student loans and your partner may have credit card debt. Maybe you inherited your grandfather and lived paycheck to paycheck. Regardless, you need to know where your partner’s finances stand with yours.
Thankfully, the financial life of my fiancée Rebecca and mine is pretty straightforward; We both get equal pay and neither of us is in debt. After showing each other the inner workings of our personal finances, we came up with a plan to streamline and simplify.
First, we made Rebecca an authorized user on one of my credit cards and designated it for joint expenses. Since I am a singles fanatic, I chose the card with the best grocery and dining benefits, as it accounts for the bulk of our spending. This made it easier for us to distribute money, budget better as a team, and even earn more reward points than we spent.
Then, after sharing several months’ worth of expenses, we opened a joint checking account and started sending our paychecks there. We also set up monthly transfers from this account to our personal accounts to give each other a regular spending allowance. To keep gift giving a secret around holidays and birthdays, we’ll increase this allowance to pay for additional gift expenses. This strategy not only simplified bill payments – it also ended the era of moving money back and forth.
Finally, it was time to tackle investments and emergency funds. We decided to consolidate Rebecca’s investments in Vanguard, because tracking her investments in multiple firms was time-consuming. Then we cleaned his accounts and set up an automated monthly investment plan in the portfolio. When it came to our emergency fund, we decided to keep 3 months of living expenses in a high interest savings account.
Your current conversation may seem different from ours, and that’s okay. In any case, you’ll want to start by identifying your assets and liabilities as we did. Assets are things you own—your investments, assets, paychecks, etc.—and liabilities are things you owe, such as rent and student loans. Then look at your budget. If you haven’t budgeted yet, start by sorting your monthly spending into categories—housing, dining out, savings, etc. If you notice that you are not saving as much as you would like, you may want to reduce your spending in other areas.
Keep in mind that implementing and sticking to a budget will require discipline from you and your partner, and may require changes or sacrifices in your daily life. But don’t be afraid to hold each other accountable. If you’re trying to save but see Amazon packages getting deposited at your door, ask each other if you’re on the same page about what’s needed. The conversation can be tough, but remember that it should never feel like it’s you versus them. You and your partner are a team working towards a goal.
In my previous blog in this series, I’ll discuss what may be the heaviest of these talks: the conversations of the future. To make your marriage last, you’ll want to understand how your partner sees the future and what they prioritize.
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Digital Advisor® can help you and your partner plan for whatever the future holds.
“What to do before you say, “I do”—present”handjob