June 16, 2022|Kate Salsman, CFP®

As a relationship becomes more serious, couples are often faced with some pretty big decisions—like whether to move in together, get married, or start a family. These are the milestones that tend to get the most attention, but how you merge finances with your partner is equally important. In fact, arguments about money appear to be the top predictor of divorce, according to Kansas State University research.

Open and honest communication is key, especially when it comes to combining and managing finances as a couple. Here’s a simple guide for doing just that.

Share Your Financial Situation

The first step is clarifying where you each stand financially. Make it clear that the goal is for the two of you to get on the same page; not pass judgement. This involves putting it all on the table. Consider sharing things like your:

  • Debts
  • Income
  • Assets
  • Credit issues you may be dealing with, like a past bankruptcy

Seeing everything in black and white can help you determine your financial starting point as a couple.

Talk About Budgeting Styles and Spending Habits

Your other half might manage their money differently than you do—and that’s okay. Now is the time to open up about budgeting and spending styles. One of you might manage a spreadsheet of monthly expenses while the other prefers using an app. Some people don’t track their monthly income and expenses at all. What matters most is understanding how your partner approaches their finances.

It’s also wise to talk about spending styles. Does one of you have a habit of overspending or “going over budget?” If so, make space to talk openly about why. The solution could be as simple as modifying your budget to make more room for discretionary spending.

This all goes hand in hand with your individual money mindsets. The way we view money shapes our attitude toward spending. Sharing your unique perspectives can help you each understand how the other person feels about finances. Perhaps one of you grew up in a household that encouraged being frugal, while the other witnessed reckless spending. Knowing these things can shed light on how you each relate to money.

Dive into Financial Goals

Ask each other questions like:

  • What big goals to do you have for the short term? (For example, buying a home, starting a family, or going back to school.)
  • If we decide to have kids, how are we going to tackle child care?
  • What about long-term financial goals? (Maybe one of you wants to start a business, move to another state, or take time off to travel.)

Talking about these kinds of things can help you understand if you share the same values. If you do, you can make a plan to work toward your goals together.

Decide How to Commingle Your Finances

Every couple is different, so what feels right for one might not be practical for another. Some ideas for blending your money might include:

  • Going all in and fully merging your finances (joint checking and savings accounts).
  • Maintaining separate accounts for individual bills and spending, then a joint account for shared bills and financial goals.
  • Continuing to keep separate accounts, with each of you paying for different household bills in a way that feels fair to both of you. For example, the higher-earning partner might take on a larger share than the other.

Again, it all depends on what suits your personalities. For what it’s worth, a recent study from Cornell University found that couples who throw their money into the same pot are more likely to report higher relationship satisfaction. It’s also associated with higher levels of harmony and commitment.

No matter how you decide to combine finances, you’ll want to get clear on which budgeting style works best for the both of you. Doing so can create healthy financial boundaries. After all your bills are paid each month and you’ve set aside money for financial goals, how much are you each allowed to spend on yourselves? This includes everything from going out with friends to shopping to personal care purchases.

Keep the Conversation Going

Having “the money talk” isn’t something that happens once. Think of it more like an ongoing conversation. Consider carving out time once a week or so to check in on your household finances. You can use this time to track your spending for the week and talk about any big-ticket purchases you may want to make individually or together. Your financial goals might also change as you and your partner move through different phases of your life. Open communication can help you both stay on the same wavelength.

At Paragon Private Wealth Management, we understand the challenges of combining and managing money as a couple. We’re here to walk you through it, no matter where you are in your relationship. Get in touch with us today to schedule a meeting with an experienced wealth advisor.