Five tips to combining finances with your partner
10 Jul 2013
By Finn Dorney
In past generations, there weren't usually questions around combining finances as it was something that was simply done once you got married. These days things are a little different and perhaps more complicated, particularly for couples that get married when they are older and more likely to be financially well-established.
At some point in your relationship you will no doubt get to the point where combining your finances seems to make sense, and it certainly can make your lives easier. However, without considering my five tips below, this transition could cause more issues than it solves:
1. Have an open discussion
Before you do anything else, it is extremely important to lay everything out on the table. Chances are you will not both have an equal financial upfront share or an equal level of ongoing salary, so it is important to discuss how this will affect your situation, if at all.
2. Complete a budget
Probably the most important aspect of any financial household should be an understanding of what expenses each of you have, and ensuring you can afford the lifestyle you want. In essence, a budget will make a plan for every dollar of your after tax income, including saving for future goals such as holidays, kids and so on.
3. Set financial goals together
Setting your short term and future financial goals will give you a plan to work towards. If this is done properly, you should be confident that your savings will be readily available to draw upon when required. If you do not set goals, it is highly likely that you will end up spending a large portion of your savings on unimportant items. This in-turn leads to making compromises you would rather not, such as working many years past your preferred retirement age.
4. Open a joint bank account
Once you have completed steps 1 to 3, you are ready to start the physical process of combining your finances. The best place to start is with a joint bank account. This account can be used to capture your salaries. From here, you may choose to have automatic payments directed to loan accounts or directly to pay bills each month, this will obviously depend on your situation. For more tips on paying bills, check out my three blog series on this topic.
5. Regularly review your budget and financial goals
To ensure that you remain on track to meet your financial goals, it is imperative that you review both your budget and your goals on a regular basis — perhaps every six months would be sufficient.
By following these five steps openly and together as a couple, you should be well-prepared to handle the transition from single to combined finances with relative ease.
Whilst combing finances is not for everyone, I personally found life much easier after my wife and I made this change. Leaving behind the 'my/your' mentality and moving to a 'what's mine is yours' approach meant that we were able to achieve a lot more of our personal and joint goals, which is really what life is all about.
To learn more about Finn, view his online profile.
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