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Sharing Finances: How to Get Started
It is exciting when couples come together to set up a new household, create a blended family or prepare for marriage. Navigating finances together can be a bonding experience or a point of stress, depending on how you handle the situation.
Discussing finances in a relationship is essential so that both partners are on the same page. When individuals are forthcoming about things like salary, debt, spending habits and savings, it can solidify a partnership going forward.
Opening up the lines of communication around finances is the best way to ensure that both partners feel like they are on the same page regarding money. Communication can begin with sharing high-level financial goals and then lead to sharing more detailed information like credit scores and debt as the relationship progresses.
Couples choose to combine finances in many different ways. While setting up joint checking and savings accounts was previously the standard for couples joining their finances, many different financial arrangements can work for various situations. Couples may choose not to combine their finances completely if one has prior debts, pays child support or has a lower credit score.
These financial arrangements can change as life experiences change. It is always good for partners to communicate with each other about finances so that they can make adjustments along the way. Life events like a new job or the addition of a new child can be an excellent time to reevaluate whether the current financial arrangement is working and if it should be adjusted going forward.
Share Financial Histories
Establishing a baseline for the financial partnership is essential because people rarely discuss these matters while dating. You might go into a relationship being aware of high-level facts like which partner earns more than the other, but the nitty-gritty details are important when building a financial future with a partner. Reviewing income, expenses, savings plans and debt is a good way to start.
A couple builds trust when they both feel they understand the financial picture in the relationship.
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Discuss Financial Goals
An important step when sharing finances with a partner is discussing financial goals. These goals could be anything from paying off credit card debt to saving for retirement. A good exercise is for each person to list their financial goals and then rank them in order of priority. Once the lists are shared, you can see which goals you agree on and which you might need to discuss further.
It's good to establish both short-term and long-term goals as a couple. You can work to pay off student loans while also building emergency savings, for example. When couples agree on goals, they feel shared accomplishment when they achieve their goals.
Create a Budget and Spending Plan
A budget is just an estimate of how much income you anticipate receiving over a certain period of time and how you expect to use that money. Budgeting helps you manage your monthly expenses, prepare for unexpected costs and afford big-ticket items over time.
Four steps to create a budget:
You don't have to create your budget from scratch; several budgeting apps make tracking your income and expenses easy. You Need a Budget (YNAB), Goodbudget, Honeydue, Monarch Money and Pocketguard are a few options. Please note that some of these apps require a fee to use. These can make budgeting easy by tracking and categorizing your spending for you. They also help you to keep your budget in mind with alerts and reminders.
Both partners must be active participants in the budgeting process. Setting a regular time to meet and review the budget can help each partner feel involved. This time can be used to track spending, review overages and plan for the future. A budget should be an ever-evolving document, not something that's set in stone.
You can feel a shared sense of accomplishment when you are in an excellent financial position as a couple. If times are tough, you aren't shouldering the financial responsibility alone; you can lean on your partner for support to get through it. Ultimately, sharing your finances with your partner can be a step in the right direction of solidifying your partnership.
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This article provides general information only and does not provide financial advice.