Not really sure how to manage money as a new couple? It can be tricky, but Laura gives solid advice for how to know what's right for your situation. Use these six tips to avoid potential disagreements and create a great financial life together.
When you’re in a committed relationship all financial decisions should be discussed and shared equally—otherwise you’re just living two separate lives under one roof.
This is how I recommend you manage money as a couple because it’s how my husband and I have managed our finances for a long time and it’s worked very well for us. Our vocabulary doesn’t even include the phrases my money and your money—it’s our money.
But as I mentioned, if you’re not 100% committed and certain that you will be with your partner forever, or you have any reservations about merging money, then please don’t.
You might feel sophisticated buying a house together or sharing a credit card, but it’s incredibly risky to share debt, bank accounts, or investments with someone you don’t fully trust. Untangling joint accounts after a break up can be a nightmare.
Co-signing a loan or credit card means that you’re responsible for the entire debt if the other person disappears or doesn’t pay. If you own it, you’re legally on the hook for every penny charged on it, even if you weren’t the person who bought anything. And having a joint bank account means that either party can drain it at any time.
So, it’s all about trust. You’re the only person who can make the call whether it’s in your best interest to mingle some or all of your money with another person.
See also: How to Buy a House With Someone Else
Tip #2: Decide What’s Fair
Alyssa said she and her boyfriend view their money as ours, not mine or yours. But they’re not sure how to handle expenses because one earns more than the other.
You will always earn more or less than your partner or spouse, and you’ll also have different amounts of expenses and debt at different times. The financial give and take in a relationship is never even.
There have been years where my husband earned double or triple my income, while I also incurred big expenses like graduate school. Likewise, there have been years when I was the breadwinner.
When you’re in a relationship for the long haul, both of your incomes, expenses, debts, and savings are yours to manage as a couple. So all income and expenses should flow through the same joint account.
Yes, that’s a lot of transparency. That’s the point. When each of you knows the truth about your finances it builds trust, fosters communication, and allows you accomplish more together than you ever could alone.
When each of you knows the truth about your finances it builds trust, fosters communication, and allows you accomplish more together than you ever could alone.
However, I must repeat that if you’re not 100% committed, there’s no rush to merge money. You might choose to split household expenses—like rent, groceries, and utilities—down the middle, or to contribute proportionally based on your income or usage.