Whether you’re planning to cohabitate or you’re already living together and are starting to plan financial goals, here are some tips on bringing your money together.
Talk about money with your partner early
Whether you’re married or not, it’s important to understand your partner’s financial situation, goals and values. Feelings about money formed during childhood often influence us as adults—for instance, fear of not having enough, discomfort with debt, or family taboos around talking about money. Even without these money hang-ups, everyday spending and saving can be stressful when you’re combining finances with another person.
If you and your partner are moving in together, discuss how you’ll split household costs. Will regular expenses like rent or mortgage payments, utilities, home insurance, groceries and internet be shared equally or in proportion to your respective income levels? If either of you has children, will you share daycare and other child-rearing costs?
Once you’ve covered everyday expenses and how to track them, consider how you’ll deal with the unexpected. Will you both contribute to an emergency fund? What about big-ticket surprises like a broken appliance or leaky roof? How will you handle it if one person wants the cheapest solution while the other prefers paying more for quality or prestige?
Then discuss how much to budget for discretionary items like restaurant meals, vacations, recreation and entertainment. Is everything shared, or does each partner get to spend their own “fun money” after financial obligations are covered?
Every couple is different, but for these and other money matters, clear, open and honest communication is vital to avoid conflicts and resentment down the road. Don’t wait until you face major events like buying a home or dealing with one partner’s sudden unemployment to start discussing your finances openly.
Sharing your life—and your debt
Legally, each person remains responsible for their own bank accounts, loans and credit card debt. But if you’re planning a life together, reducing your combined debt creates a stronger financial foundation. Helping your partner pay their debt will also improve their credit score, which may benefit you both in the future, when you need to finance major purchases like a home. Talk about how you’ll manage debt together. Will you help each other pay off existing obligations like credit card balances or student loans?
If you choose to keep debts separate, be aware that if your partner is behind on loan payments, the lender may seek permission to make a claim on jointly held assets—including your home.