The Update

Combining Finances and Talking to Your Spouse or Partner about Money

Money can be a challenging subject to bring up with your life partner. But despite how uncomfortable talking about our finances may make us feel, the discussions eventually have to happen for you and your partner to build an honest and sustainable future together.

We know this because arguing about money is the top predictor of whether a couple will get divorced, according to a study by Kansas State University. Money arguments often take longer to recover from and are often more intense than other spats, since they can involve criticisms of what your partner values and how they make decisions. So whether you’re just moving into the financial part of a newer relationship or you’ve been charting the waters for a while, here are some steps to ensure fairness and avoid financial surprises (and fights).

To Merge Or Not To Merge…That Is The Question

One common area of tension can be around whether and when a couple should merge their checking and savings accounts and debts — along with how they will take on shared expenses. Before you decide to merge your finances, think about your level of commitment to each other. If you’re not sure yet whether you’re in it for the long haul, merging your money isn’t right for you. But if you are both ready for a long-term commitment, you should be in good shape to move forward.

The thing to realize is that there’s no right or wrong way to do it. What’s important is to come up with an agreement that works for the two of you — and that you each maintain a degree of financial autonomy and control. It’s not okay for one partner to control all the financial power and for the other to have to ask for permission at every turn. That’s too parental. But whether you go with one joint account, separate ones, or a yours-mine-and-ours approach the big key is talking about it.

Combining finances takes time, compromise, planning and likely a few bumps on the road. The key is to handle the small issues as they come up so they don’t become larger problems that can lead to bigger fights about money.

How To Talk About Money

To start your money conversations off on the right foot, pick just a few key topics to cover initially. Then set a specific time and place to talk. You’ll want to do this when you are both in the right state of mind (not getting ready for work or making dinner) so you can think about things with limited distractions and dive in for an open and honest conversation. Here’s a framework to follow.

Cover The Basics

Start your conversation by laying out the details of your individual financial situations. Yes, this will require significant disclosure on both sides, but ensures you’re well aware of the big picture. Make sure you’ve answered the following questions:

1. How much money do you make?

Talk about your salaries, bonuses, stock options and any other compensation. If you’re a full-time freelancer or independent contractor with an unpredictable income, make sure your partner understands that.

2. What do you own and owe?

Make a list of your assets and debts. Then talk through how you view debt in general. If one of you has significant student loans or credit card balances, does the other feel some obligation to help pay that off? It’s okay to decide that you’d like to each tackle your own debt separately, but in that case you may want to hold off on fully merging your accounts.

3. What are your financial priorities?

Are you seeking financial security, or are you more concerned with finding meaningful work than a cushy salary? Is spending money on fun, exciting experiences what’s most important to you? Or are you committed to saving up to own a home?

4. What are your personal and joint goals?

Find out where you stand on career paths, family, and what you prioritize when it comes to saving. Do you dislike your job and want to go back to school or start a business? Now is the time to share those aspirations.

5. What are your financial hang-ups?

Are you a big spender? Are you terrified of debt? Did you experience financial problems in your childhood, or overcome financial difficulties in your past that continue to weigh heavily on you?

6. What is your “financial style”?

If you’re a saver and your partner is more of a spender, is it going to drive you nuts to see the way the other person chooses to spend money on a daily basis, even if all their other obligations are met?

Create a Personal Plan

As you come out the other side, remember, there’s no right or wrong way to merge your finances. And it’s perfectly fine to move slowly. For example, some couples open a joint checking account where they deposit a portion of their paychecks to cover only joint expenses like rent, utility bills, and basic groceries. Others also have a joint credit card that they use to pay for date nights out, travel, or anything else they purchase together.

Each person may also keep a separate credit card or bank account to cover their individual expenses. This can be helpful when it comes to having financial freedom with day-to-day spending; when each partner has some autonomy, it can help circumvent fights about what may be frivolous or not.

No matter what you decide, try not to feel overwhelmed. Remember to go at your own pace and do what feels comfortable for you both. With a few best finance practices under your belt, you will be on your way to building an open and honest financial relationship that works for both of you.

If you want some more help, Rio Grande Credit Union has resources for you. You can setup a coaching session with one of RGCU's certified financial coaches. They can go over joint savings or checking accounts, ways you and your partner can budget for the future, and other subjects related to money management.