Merging Finances with a Life Partner
Merging Finances with a Life Partner
Many brides consider June the best month to plan a wedding for many reasons. June is named for the Roman goddess of marriage, Juno, so many cultures believed being married in June would bring happiness and prosperity. June was also a popular month because the birth of children conceived during the summer would not interfere with harvest.
Regardless of when a couple decides to get married, planning a wedding can be easier than merging their finances. For a couple, merging finances can be challenging and difficult. Money matters are a common cause of stress and arguments in a relationship. If you and your partner are considering merging your finances, there are three things you need to remember:
- You are not required to merge your finances completely;
- There is no “right” way to merge finances; and,
- Communication is the key to successfully tackling financial matters.
You Can Choose Whether or Not to Merge Your Finances
No rule requires couples to merge their finances, even after they marry. It is up to you whether you want to merge your finances. You can keep everything separate and decide how you will split joint costs, such as housing, utilities, and food. The benefit of keeping your finances separate is that you have total control over the decisions related to your finances. You do not need to seek input from your spouse or partner about how to spend your money or invest your money. If you pay your fair share of the joint expenses, you do not need to worry about your spouse complaining about how you spend “your” money.
However, one of the disadvantages of maintaining separate finances is considering what happens years down the road. Let’s suppose one spouse is very frugal and saves for retirement while the other spouse decides to “live for today.” During retirement, one spouse may have more money to travel and pursue hobbies while the other spouse has barely enough money to cover expenses. Also, a spouse who does not save for retirement may be required to work many more years than a spouse who worked hard to build a retirement account.
If you choose to keep your finances separate, you need to make sure that you consider your responsibilities to each other now and after retirement.
There is No Right Way to Merge Finances
A couple can choose when and how to merge their finances. As discussed above, a couple may want to keep everything separate. However, another couple may decide to have a few joint accounts and keep all other accounts and financial matters separate. Many couples decide to go “all in” and combine all their finances. Whatever decision you make, communication is the key to successfully managing money as a couple.
Honest and Open Communication is Essential
Before you merge your assets, you need to discuss your financial goals. Some of the questions you should ask yourselves include:
- How should we split joint expenses?
- What should we do about debts and assets we bring into the relationship?
- How do each of us manage money and what are our money habits?
- What are our short-term and long-term financial goals?
- What is the best way to organize our finances?
- Who should oversee our finances?
- How do we make major financial decisions, such as when to purchase a new vehicle, take an expensive vacation, or purchase a home?
- Will we keep separate accounts or will all accounts be joint, including assets and debts?
- What is the limit we agree we can spend before discussing the purchase with each other?
- Do we need a pre-nuptial agreement?
It is best to share as much information as possible about your finances before you agree to combine finances. Communication and careful planning can avoid some of the tension and arguments about money that many couples face who do not invest the time necessary to learn about each other’s money management style before combining finances.
Seek Professional Advice from a Financial Planner
It can help to discuss issues related to financial planning with a professional. Working with a financial professional can help you address issues regarding your finances that you may not be aware exist until you begin discussing merging your finances.
The CJ Berry Group offers a variety of services related to financial planning. Call (844) 885-4200 to discuss our services and request additional information.
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