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.
Tip #6: Know Your Financial Histories
In addition to discussing your goals for the future, you should also understand what happened in the past.
Fortunately, if your partner has bad credit, it doesn’t affect yours. However, it may affect your ability to qualify for joint credit accounts like a credit card, auto loan, or mortgage.
If you’re not sure what your credit history looks like or how much debt exists in your name, simply pull your credit reports. You can get one report from each of the national bureaus (Equifax, Experian, and TransUnion) for free once a year at annualcreditreport.com.
You can also get some of your credit reports and credit scores for free as often as you like when you sign up at one of my favorite sites, Credit Karma.
When you already have credit accounts in just your name, it’s much better for your credit to maintain them as-is. Instead of closing a credit card, use one of these options to share a card with your partner:
- Become joint account holders on a new card where co-signers share full financial responsibility and have the account reported on both of their credit reports.
- Become an authorized user on a partner’s existing card where you have no financial responsibility to make payments and may have the account reported on your credit report.
Adding an authorized user to your card can be a good strategy to help a partner build or repair poor credit—but only if the card reports transactions to his or her credit report. Card companies vary in how they treat authorized users, so check with your issuer to find out their policy.
However, I don’t recommend being a joint account holder or adding a partner as an authorized credit card user unless you are 100% committed as a couple. Credit cards are easy to use and abuse, so they open you up to a huge amount of risk if a partner doesn’t use them responsibly.
How to Manage Money as a New Couple
If you managed your finances for many years before coupling up, you may want to maintain some amount of financial autonomy. As I mentioned, this isn’t how it works in my marriage, but I respect that every relationship is different. So what should you do if you're taking this approach?