Money is a touchy subject in many households. Getting married will certainly affect you and your partner financially. Whether you decide to combine your finances or not, having open and honest conversations about money early on is crucial. Studies have shown that 1 out of 3 adults admit that money is the source of conflict in their marriage, making money one of the leading causes of divorce. This doesn’t have to be the case! Taking the appropriate steps before walking down the aisle can save a lot of hardships in the future. Here are 4 financial topics to discuss with your partner:
Discussing income is a great place to start financial planning together. Your salaries may look different and come in different forms. Whether hourly, salary, or commission-based, discuss the details and share any expectations you may have for future bonuses or raises. When income from both sides is laid out it is easier to see what you will be working with each month.
Revealing debts can be awkward and sometimes shameful for some people. Whether you’ve gotten yourself into credit card debt or maybe you have student loans, don’t keep it from your partner. Keeping debts hidden will only result in future issues. Laying it out in the open also allows for collaboration. You and your partner can now work on a plan together to alleviate unwanted debts instead of just one of you carrying the burden.
Each of you may have multiple bank accounts used for multiple purposes. Whether you decide to combine your finances or not, revealing your bank accounts to each other leaves less room for secrets. Some couples choose to keep financing separate but have one joint account for household expenses and savings which could be a good compromise if there is a difference of opinions. Will you each split bills equally? Will each contribute a certain percentage of their income? Will everything go into one account and money pulled out as needed? These are important questions to ask. Discuss your expectations with each other and work on finding the best situation for your needs.
Budgeting is probably one of the most difficult aspects of financial harmony. Each person’s priorities and spending habits could greatly differ making it hard to find a good balance. Start by laying out all of your necessary bills for each month, i.e. mortgage payment, utilities, Wi-Fi, groceries, etc. Once these are established, look at the remaining income for the month and determine the amounts that can be allowed for entertainment. This will look different for everyone, maybe you like to eat out at restaurants multiple times a month or maybe your partner has a gym membership to upkeep, whatever your lifestyle entails write it down and budget for it. The more detailed you can be the better. Don’t forget to budget for savings and emergency expenses as well!
Financial planning as a couple doesn’t have to be stressful or difficult. Use each other’s strengths and weaknesses to develop a system that works best for your household. If buying a home together is the next step in your relationship, reach out to us today to learn more and get started! For more resources, visit www.firsthome.com/resources.