Take These Steps Before Merging Finances
Merging finances as a couple can be an exciting, but challenging time. Taking this next step with your partner is one that requires open communication and it is imperative for both parties to agree on financial habits. Before moving forward, consider these steps to help you navigate your financial wellness.
Write your goals down together.
Until this point, you probably had your own idea of what is an acceptable amount to save and spend. However, your partner’s perspective on appropriate saving and spending habits may be different. Even if you both have similar goals, you may have different approaches on the road to get there. It is important to discuss and, more importantly, write down your financial goals. Establish how much is an appropriate amount to save and spend to achieve these goals and create a timeline. Define which are a priority for the both of you and focus on those first – don’t get overwhelmed!
There is not one, set approach.
If you opt to merge finances, it does not have to be all or nothing. There are plenty of ways to efficiently share finances as a couple. You can opt to open a shared account and contribute to that for shared expenses, but keep individual accounts for your personal spending. Contributions to the shared account can be split equally or according to the earnings of each party. Some people choose to pick different bills and expenses to pay for – you can pay the mortgage while your partner pays for groceries and the utilities bill. Regardless of how you choose to move forward, make sure everyone is on the same page.
Make it fun, not a chore.
Not everyone finds conversations surrounding finances exciting. Saving for retirement, purchasing a new home, or being able to send your kids to school, can be stressful. It takes years of disciplined saving before reaping the benefits of your hard work which may be discouraging. Be sure to make saving fun and find the benefits. Save for a vacation or weekend away, but only allow yourselves the opportunity if you are remaining on track with your other goals. Rewarding yourselves along the way should help you stay consistent.
Communicate and stay on the same page.
Throughout the process, continue to track and reassess your progress and goals. There may be one spouse who makes more of the financial decisions which happens often in relationships. If this is the case, be sure to periodically take some time to communicate what is being done, why it is beneficial, and where the finances stand. This way, should anything happen to the “decision maker”, the other spouse will still feel in control of their financial situation.
Overall, the most important aspect of merging finances is communication. Communicate your goals. Communicate your approach. Communicate any changes along the way.
Representatives do not provide tax and/or legal advice. Any discussion of taxes is for general informational purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate.
Chris Kampitsis is a registered representative of and offer securities, investment advisory and financial planning services through MML Investors Services, LLC. Member SIPC. www.SIPC.org 6 Corporate Drive, Shelton, CT 06484, Tel: 203-513-6000 CRN202208-269345