The dos and don’ts of spending money with your partner
Not looking forward to the “money talk” with your partner? There are no set rules, but here are some tips to make the transition easier.
and Tom Anderson
August 03, 2022 | Money
The number of adults living with their partners is on the way up.
Maintaining a good relationship with your partner can be difficult. Throw money into the mix and it can make or break your financial life.
There is no set method for how you can pool money with your partner. However, we have some dos and don’ts from relationship and financial experts on how to spend the money we share in a relationship. In addition, we offer other financial services that have worked for couples just like you.
In this article:
“Activities” involving money
Focus: Address your concerns ahead of time
Being open and transparent goes a long way in any difficult conversation. Especially this one. Be honest with your loved ones about your problems. Write them and encourage your friends to do the same. Then, openly discuss any concerns you may have and think about what might help.
Don’t be afraid to ask tough questions. How much money do they make? What if you divorce? Do they have questionable investment strategies? Relieving your worries is not a way to insult your loved one. Try to find answers that work for both of you.
Do: Discuss the accounts you will merge
Are separate bank accounts or joint accounts right for you? This answer varies from couple to couple and depends on where you are in your relationship and your financial life. Short answer – you have to do what’s best for you.
For some couples, this means keeping separate accounts, and having a joint account that each can contribute to. Joint accounts like these should be used to share things like rent, mortgage, utilities, and groceries.
If you choose to pool funds, both you and your partner will have access to the funds, such as a joint checking account. Meaning you can both legally withdraw the money and use it for whatever you want. You are both responsible for any debt that comes into the account and there is a possibility of affecting each other’s debts.
Do: Create a repayment plan
Debt stress can cause serious problems in a relationship, so you want to try to eliminate it if possible.
Start by having an open and honest discussion about your debt and come up with a financial plan. Ask questions like how much debt do you have? What is the monthly payment? How high is the interest rate? You may not be able to pay off all your debts at once, such as student loans, but you can start by paying off smaller debts such as credit cards.
What if it’s your friend who has a lot of debt? Again, this answer will be directed at you as a family. You may want to do everything you can to help your partner financially. However, it is important to be careful about the help you can give. Communication is very important. Brainstorm ideas on how to help the other person get back on track and offer as much emotional support as possible.
Do: Set a budget
How much is “too much” when it comes to your spending habits? Set a budget that supports you and your partner. This will give you an idea of what your investment combination will look like. Gabriel KaplanA CFP® and CPA in New York City, he told Money Management International that he and his wife “agreed on saving money, deducting what we spend in our lives and dividing what we have left over… Things have worked out because we stick to our budget and we both trust each other. who is responsible.”
Create a budget for the first two to three months. Include groceries, rent, household expenses, and vacation days. Think about how much money you can spend per month or week. This will give you a real picture of where most of your money is going and how much you need to save. Set a budget and stick to it for the first few months and then adjust as you go. Don’t think that you have a limit on your budget, instead use it as a guideline for spending.
A budgeting app can help you save money and track your spending as a family.
Do: Start a risk fund
Building an emergency fund should be one of your first financial goals together. Throughout your relationship, you will encounter unexpected expenses. One of you may lose your job, major home renovations may occur or health problems may arise. There is an emergency fund to ease the problem.
It is a safety deposit that will be used for emergencies so that you don’t have any debt. A good rule of thumb is to save 6 to 9 months’ worth of cash.
Make sure you deposit this money in another account so that you are not tempted to withdraw it. Consider a high-yield savings account so your money can earn interest over time. Try to pay back your money when you spend it and use it in case of an emergency.
Do: Save for retirement
About Tom Anderson
Tom Anderson is an award-winning financial journalist whose work has seen the light of day CNBC.com, Kiplinger’s Personal Finance, Money, Monocle and Wired. He was a 2008-09 Knight-Bagehot Fellow in Economics and Business Journalism at Columbia University.
Read more about Tom Anderson
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