Making a commitment, whether marriage or living together, affects your life in many profound ways, including financially. What does that commitment and partnership mean for your finances?
- Money starts more fights than any other topic, even sex. In order to combine and share your lives, you need to be honest about your spending habits and debt.
- You may not be able to agree on everything, so learning to accept and work with those differences will be important to a health relationship and financial situation.
- Combine for the big items and household expenses. A Joint checking account will give a surviving spouse access to the money immediately if something happens. Couples get a bigger tax breaks on selling real estate. However, for the small stuff, it is good to either have a personal checking account or credit card, so you can buy surprises or gifts without explaining the purchase.
- Know your partners financial situation. It is important to know how much debt your partner is bringing to the relationship as well as their credit rating. Utility companies, employers, and landlords check credit and if their credit is not what you expected, it could ruin both your future plans. Set goals and make plans as a couple, using a financial planner if necessary.
- If you have assets you want to keep in your name, then keep them in your name. This is especially important for people with valuable assets or who have obligations from a previous marriage. In some of these situations, to protect both parties, it can be beneficial to consider a prenup, even though everyone likes to think if the really love me, then we wouldn’t need one. The reality is that some people have responsibilities beyond the current partner and a prenup ensures they can pay child support and leave an inheritance to children from previous relationships with less legal hassles for the children involved. The bottom line is that you have to be honest and communicate in order to have a healthy relationship financially.