Whether you are newly married or a couple who has recently moved in together, you and your partner need to have a discussion about your finances as a couple. Finances are different for couples as opposed to roommates as there is more co-mingling of finances with married and committed couples. While some of the topics up for discussion are similar to those roommates would discuss, many people find a conversation about money with a loved one to be difficult. Making a financial plan and establishing financial guidelines for yourselves as a couple isn’t a sign that you don’t trust each other; it is a commitment to building a firm relationship in all aspects, including financially.
1. Joint Accounts or Separate – Most people believe that couples, particularly married couples, should have joint credit, checking and savings accounts in order to be financially transparent to each other. However, it is possible for a couple to be both contributing members of the partnership while maintaining some financial independence if both partners choose that option. Regardless of whether you chose to have joint accounts, separate accounts, or a mixture of both, it must be understood between both parties how the money in any joint accounts will be spent and how much each partner will be expected to contribute to those accounts. Some couples simply contribute enough to a joint account to cover their bills and anything left over is be used at the discretion of the person who earned it.
2. Division of Bills – Rent, utilities, food, and other expenses both partners benefit from should be paid for by both partners unless other arrangements are made. Some couples have a joint checking account for just this purpose. Each person contributes a specific amount each month to cover all the joint bills. Other couples contribute their entire paychecks to a joint account and pull out an “allowance” of a certain amount a month for each person. Another method used is for each person to take responsibility for certain bills while the other person takes responsibility for the remainder. Most couples find that a blending of methods works best for them. As long as partners agree on the method and are accountable to each other, any method or blending of methods will work.
3. Pre-Relationship Debt – It is highly unlikely that one or both of the partners would come into the relationship completely debt free. It is also highly unlikely that both partners would have the same amount of pre-relationship debt. However, it is important for each person to be upfront and honest about the amount of debt they are bringing to the relationship so, as a couple, they can decide together how to take care of individual debt. Some couples continue to pay on their individual debt as they did before they were a couple. Others combine their pre-relationship debt and pay it off as a couple. Decisions about this issue are very personalized and depend heavily on the couple’s future financial plans. If they are considering a major joint purchase, such as a car or a house, then the less debt each person has the better chances they have of receiving a loan at a good rate. In order to make a decision about pre-relationship debt, both partners need to be on board with the financial plans they make and the goals that are set before deciding the best way to deal with individual debt.
4. Joint Purchases – Big-ticket items that are purchased jointly, such as cars or houses, should reflect joint ownership on any titles or deeds. If both partners are contributing to the cost of the item, then it only makes sense that both partners have the right to claim partial ownership. Before the purchase is made, both partners should have input on selection of the item and they need to discuss how the item will be able to be accessed by both parties, if necessary. Joint purchases by non-married couples should be considered very carefully as there are no legal precedents for the distribution of communal property should the parties decide to dissolve the relationship. Both partners must agree on how the financed money will be repaid as well as how much each partner is responsible for paying. Any agreements that are made between partners should be written down and signed by both partners in case there are any issues regarding the division of communal property in the future.
5. Tax Filing – Whereas unmarried couples don’t have to decide how to file their taxes, married couples can file either “married filing jointly” or “married filing separately”, depending upon which situation is most beneficial. Generally, most couples will file jointly as it is the most advantageous for both partners and they will receive the largest refund by filing together. Should a couple decide to file jointly and get a refund, they should discuss how the refund will be spent or shared between them. To make the most informed decision regarding the benefits of filing one way over another, couples may want to consult certified public account or tax specialist.
Newly established couples have many changes that occur rapidly including ones that are financial in nature. In order to get on a good financial path, couples should have open, honest discussions about their financial goals and the plans that will help them reach those goals. Once both partners are on the same page about money, they can move forward, confident that they are on firm financial footing together.
Allen Jones is a professional blogger the provides business and personal financial advice and information. He writes for PureChecks.com, the best place to order checks and receive them by mail fast.