15 Jan How to Manage Money as a Couple
On the surface, there are obvious benefits to a joint bank account. Who wouldn’t want to split bills, rent and/or mortgage payments, and other financial obligations right down the middle? Similar to any other major decisions in a relationship, it’s wise to discuss the best ways of how to handle all the boundaries and decisions that come with managing money with a partner. Before you decide to take the plunge, consider these tips to help you both come together and stay on top of money management.
Communication is Key
We hear about this all the time for all facets of a relationship. This lesson is no different when it comes to money. Make sure to be completely transparent when it comes to your current financial status as well as any debt you may carry with you. It may not always be easy, but starting with clear communication allows for a smoother plan of action.
Divide the Financial Responsibilities
It’s nice to have a joint account set in place for bill payments where both partners contribute financially. Whether it’s set payment days, automatic withdrawals, or just remembering to keep track, you will want to make sure each partner knows what they’re in charge of when it comes to finances. By having a conversation about who pays what, or of who is in charge of strategizing which day the bank draft occurs, it minimizes stress and possible late payments.
Establish Set Contributions
Being open about how much each person is able and willing to contribute should also be a part of your initial conversation regarding joint money management. Some factors to consider are the amount of each paycheck, the frequency of pay, and any individual financial obligations. For example, someone who is paid weekly may contribute a smaller monetary amount more frequently while their partner contributes a higher monetary amount twice per month. Each couple will handle this differently, but it’s important to make sure these contributions are established beforehand to ensure financial responsibilities are getting accounted for.
Create a Budget
Discussing certain spending parameters and establishing a budget is important before you and your partner combine finances. Setting boundaries such as what the joint account/credit card can and cannot be used for, and how much money should carry over to the next month will help keep you both responsible and will help assist in saving money.
Set Financial Goals
We’ve mentioned discussing the past (any pre-existing debt), the present (your current financial status), so it’s only natural that you would discuss your financial future with your partner as well. What financial goals do you have for yourself, and how do they relate to your financial goals as a couple? Is there a large purchase that you’d both like to work towards? A good goal to start with would be to establish the beginning of a savings account within your joint account. By contributing a couple of extra dollars per month beyond what’s necessary to take care of your current financial obligations, you have the option to slowly save together.
Have your own Personal Bank Account
While it’s nice to have the option to save and spend together, it’s always a good idea to keep your own individual bank account. This allows you to stay on top of your own expenses such as car payments, credit card bills, and insurance payments without adding any stress for your partner. Money is one of the largest points of contention in relationships, so it’s important to make sure that you balance your own finances in addition to the financial responsibilities that you share.
Feeling ready to take the next step? Click here to set up a joint account with Bank of the Lowcountry.