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.
A quirky financial tendency that endears you to your significant other in the beginning—like being a free-spirit who lives and spends money in the moment—may be a real source of irritation down the road.
So watch out for potential problems that may need to be addressed, like overspending, keeping money secrets, or refusing to create a budget. Be honest about both of your good and bad financial habits before merging your finances as a couple.
Even if you feel well-aligned financially and don’t see any potential problems, my best advice is to begin talking about money as early in your relationship as possible. Now, I don’t mean asking about someone’s credit score or net worth on a first or second date.
But by the time you have enough trust in a relationship to ponder collapsing two households into one, you should already be talking about your income, expenses, debt, and savings.
This is so important because being at odds about money is a leading cause of breakups. One study showed that the more frequently couples argue about money, the more likely they were to get divorced.
I feel fortunate that my husband and I are more alike than different in how we view life and our finances. But we had our share of fights about money in the early days that had to be ironed out.
Tip #5: Discuss Your Financial Goals
One aspect of good financial communication (and a prerequisite before merging money, in my opinion) is talking about your goals. This is the best way to truly know if you’re headed in the same direction as a couple.
For instance, if your idea of bliss is to make just enough money to live and work while traveling the U.S. in an RV, but your partner wouldn’t dream of leaving his hometown, you may be headed for trouble.
Or if your partner spares no expense because she believes life is short, but you want to live frugally, save a huge nest egg, and then retire early, you may have fundamental financial differences that are irreconcilable.
Discuss the specifics of what you want to achieve with your money in the short-term, like one to five years. And also talk about your long-term dreams for retirement. Some of your long-range plans may change over time, but having huge differences of opinion is something you need to address earlier rather than later.