The Dos and Don’ts of Combining Your Finances
There are few things I hate more than talking about money with my fiance; the topic just brings up so many feelings for both of us. But now that Eric and I are living together and planning a life (and wedding!) together, we've gotten a lot more comfortable with these conversations. Still, there are a few things I wish I had known before I was weeping in IKEA during our first shopping trip with the joint debit card. (After you've finished reading through these Dos and Don'ts, click on over to our VW-sponsored Merge and Purge area, where you'll find lots more tips and tricks for newlyweds!)
DO talk about money sooner rather than later. You don't have to share your credit scores on the first date, but getting a sense of how your partner feels about saving, spending and debt is really important if you see a future with him or her. You can often get an initial sense of things during other conversations, but you can always bring it up if you want to know more or have specific concerns. My asking about what kind of home Eric saw himself living in one day got the ball rolling for us.
DON'T think there is only one way of doing things. When it comes to managing your money together, there are lots of different options. Some couples go all in and combine everything into a joint account; others keep separate accounts and make deposits into a joint account. Some couples split things 50-50, while others split things based on income. And many other couples have one person pay for certain things (like rent) while the other handles specific bills. Talk through all your options and be creative. And agree to evaluate the plan together in, say, 60 days to talk about whether it's working. It took me a long time to ask Eric if we could change our plan when I realized it wasn't working for me, and I wish we'd just agreed at the start that our plan needed to be flexible. (Check out this chart to help determine which type of account is right for you and your partner.)
DO establish rules if you decide to set up a joint account. Sharing a bank account with someone takes a huge amount of trust and putting rules in place (even if they wouldn't hold up in a court of law) can help both partners feel more at ease. At first, Eric and I agreed that neither of us could spend more than $20 on an item for the house without consulting the other one. And we both had access to online banking so we could check in on the account at any time.
DO protect yourself in case things don't work out. Nobody wants to think about this worst-case scenerio but it's important to plan for the worst to help protect your financial futures. Make sure that you both establish good credit on your own, and work to maintain good credit as individuals. If one of you doesn't have good credit, now is the time to work on turning things around.
DO know that there is a lot of ego tied up in money conversations. As the partner who could be described as, um, less than responsible, feeling shamed for my bad decisions made me feel extremely defensive. I finally explained to my fiance that his comments about how I spend money made me feel like someone else might feel if you commented on her weight and eating habits. That really helped put things in perspective and he's been a lot more sensitive ever since.
DO put everything on the table and DON'T tell lies. You're in it for the long haul, right? So be honest about how much you make, how much your bonus was, and how much debt you're really in. Don't lie about a $20 item or a $200 item. If you screwed up, admit it. If you're suspicious or resentful, confront it right away. Financial distrust is toxic to a relationship.
DON'T start a random financial conversation late at night. It never ends well. Once Eric and I made this a rule, we were much happier. Now we schedule financial conversations so neither of us is blindsided: “Hey, baby, we need to go over our May budget because we went over and need to talk about it. Let's do that this weekend." I'm sort of amazed by how much less tense the conversations are when we both know they are coming.
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