The both of you already had dinner with the parentals, went engagement ring shopping, and even daydreamed about what your wedding day — and honeymoon night — would be.
Now it's time to talk about money.
Talking about money with your significant other isn’t optional — it’s crucial. Figuring out each other’s money habits, past debts history, credit score and most importantly understanding their relationship with money is a vital step.
After all, studies show that money has a huge impact on relationships. The American Psychological Association states that “31 percent report that money is a major source of conflict in their relationship.” Convinced yet?
To make sure that you two are together ‘til death and debt do you part, we spoke with Tonya Rapley, creator of award-winning personal finance and lifestyle blog My Fab Finance, about the best ways couples should manage their finances.
Step One: Have the money talk
When it comes to having the money talk, you want to make sure you’re laying everything down on the table so that there are no surprises down the line. Discuss things like student loans, child support payments, credit card payments, credit scores, savings accounts and even investments.
As you’re working toward your future together, also talk about financial goals individually and as a couple and the different ways you want to achieve them together.
Once you’ve discussed each other’s financial history, take the time to figure out what your money personalities are by taking a money personality quiz. You’ll get a better understanding of bae’s spending habits, relationship with money and what each of you value.
Rapley added there’s no such thing as over-communicating, and it’s important to know when the right time is to have money conversations.
“I’ve experienced situations where one partner is more conservative about disclosing their financial details than the other one. Every place isn’t the place to have a money conversation,” says Rapley. “Really understand your partner’s preferences when it comes to communicating.”
Step Two: Decide who’s the CFO (Chief Financial Officer) of the accounts
Perhaps bae likes to pay the bills last minute and you like to tackle them head on. Maybe you’re a big spender and they’re a penny pincher. Once you’ve learned about each other’s money personalities and financial pasts, determine who’s going to be in charge of the account. Rapley believes whoever is better at managing finances should take the lead.
“Whoever is the most organized because some people are naturally more organized than others,” Rapley said, “If neither party are better with their finances, it’s whoever is the most disciplined. And if neither one of you is disciplined, then it’s something you’d just work out together.”
Understand that you and your significant other are a team. As teammates, you must know each other’s roles, strengths and weaknesses to also see how you can help each other build and grow in the long run. Whoever is the household CFO, remember that you’re both equals in the relationship.
Also, don’t wait until you and your partner run into financial complications to get a certified planner involved. Get a certified financial planner and plan that work for you as early as possible.
Step Three: Determine how you’ll be managing the accounts
Discussed your money personalities: check. Decided who’s in charge of the accounts: check. Next is deciding how you’ll be managing your accounts.
Rapley elaborates and says there are three ways to manage finances as a couple — keep your money separate, put all of your money together or to have some separate and some together. At the end of the day, Rapley emphasized, “You have to decide what works best for you in the relationship.”
If you want to open a joint account, first decide the purpose of the account. Making this decision is based on what your bills and expenses are as a couple (such as utilities, rent, phone bill and who’s paying what), and your individual financial status. (Are you in between jobs, got a raise, a new entrepreneur?)
“Is that account for rent, necessities and overhead? Is it going to be for all household expenses, entertainment, insurance and so forth?” asks Rapley, “You don’t have to merge your accounts immediately. You can open an account and both of you transfer money to it.”
Take your time when making these decisions. Though the answers to the questions above might not be concrete, you can do research and decide at what banking institution you’d like to open your joint account.
While we listed a few dos, here's a few things you shouldn't do if you're merging and managing your finances as a couple.
A Few Don’ts
Don't become financially competitive
“Being financially competitive is like ‘he got a raise, now you have to get a raise or she got a raise, now you have to go find a new job’ to make just as much because you’re not her equal,” Rapley emphasized.
It's easy to get wrapped up and make finances a competition — please remember, they’re not.
Don't financially cheat on your partner
Believe it or not, the way people romantically cheat on their partners in relationships is the same way you can financially cheat.
It's called financial infidelity, which is when a partner is either hiding their expenses, has a secret account, or is lying about debt — and it’s more common than you might think.
Studies show that financial infidelity starts small. From buying an outfit without your partner knowing to making big purchases like buying a car. Either way, avoid this at all costs by staying in constant communication with your partner.
Finances, just like relationships, are all about trial, error and most importantly, growth. There might be growing pains in combining and managing your finances. Make sure that you and your partner are growing together — not apart— for your future.