Whether you’re planning to move in together or already living together and starting to plan financial goals, here are some tips to help you get your money together.
Talk to your partner early about money
Whether you are married or not, it is important to understand your partner’s financial situation, goals, and values. Feelings about money formed during childhood often affect us as adults, for example fear of not having enough, discomfort with debt or family taboos around talking about money. Even without this cash accumulation, day-to-day spending and saving can be stressful when you’re juggling finances with someone else.
If you and your partner move in together, discuss how you will divide the household costs. Will regular expenses such as rent or mortgage payments, utilities, home insurance, groceries and the Internet be distributed equally or in proportion to your respective income levels? If one of you has children, do you share childcare and other parenting costs?
Once you’ve covered everyday expenses and how to keep track of them, think about how to deal with the unexpected. Do you both contribute to an emergency fund? What about big surprises like a broken appliance or a leaking roof? How do you deal with it if one person wants the cheapest solution and the other prefers to pay more for quality or prestige?
Then discuss how much you can budget for discretionary things such as restaurant meals, vacations, recreation and entertainment. Is everything shared, or is each partner allowed to spend their own “nice money” after the financial obligations are covered?
Every couple is different, but for these and other money matters, clear, open and honest communication is essential to avoid conflict and resentment afterwards. Don’t wait until big events, such as buying a house or coping with a spouse’s sudden unemployment, to talk openly about your finances.
Sharing your life – and your guilt
Legally, each person remains responsible for their own bank accounts, loans, and credit card debt. But if you’re planning a life together, reducing your combined debt makes for a stronger financial foundation. Helping your partner pay off their debt also improves their credit score, which can benefit you in the future as well as when you need to finance major purchases like a home. Talk about how you deal with the debt together. Do you help each other pay off existing obligations like credit card balances or student loans?
If you choose to keep debts segregated, keep in mind that if your spouse falls behind on loan payments, the lender may request permission to file a claim on jointly held assets, including your home.
This post Married with money: how to combine finances with your partner
was original published at “https://www.moneysense.ca/save/financial-planning/married-with-money-how-to-combine-finances/”