'Til finances do us partDate posted: 1/9/17 02:00:00 PM
Planning the big celebration isn't the only thing you'll need to do after an engagement. Couples also need to figure out whether they will merge finances and how they'll go about doing this.
Follow these tips when determining whether to combine finances:
Consider different approaches
Not every couple approaches finances the same way. In some instances, it may be appropriate to open a joint checking account, while in others it might not be. A Forbes contributor recommends several approaches and suggests exploring each option prior to deciding on a plan. Here are three you may want to consider:
- Combining all finances completely is a well-known approach and is exactly what it sounds like. This approach is great for couples who don't have separate assets prior to entering the marriage. However, joining finances could get a little messy if either person in the relationship tends to save or spend money more frequently.
- On the other end of the spectrum is the complete separation approach. If both individuals want to maintain financial independence and spend how he or she pleases, this may be the right choice. For costs that are shared, like rent and utilities, each person can divvy up the bills to equally split expenses.
- A hybrid of these two options is to open a joint checking account in addition to retaining individual accounts. The couple can individually deposit money into the joint account either equally or in relation to their income. This account can be used for joint expenses the couple shares.
No matter your situation, there's a suitable way to join, or not join, your finances after marriage. Familiarizing yourself with alternatives is critical.
Make sacrifices together
While you might be dead set on maintaining your financial independence, it's important not to forget that you aren't the only person in the relationship. When you decide to marry, both of you will likely need to make sacrifices. In addition, you both must strive to improve individual finances as much as possible leading up to your financial union.
"Strive to improve individual finances as much as possible leading up to your financial union."
Bankrate suggested reining in debt and holding off on making substantial purchases before deciding how you will merge finances. Not only is this respectful of your partner, but it's also in both of your best interests.
"Newly married couples have a tendency to purchase things beyond their economic capacity," noted Charles Schmitz, according to Bankrate. "They want everything immediately. They get themselves deep in debt before they are ready to handle responsibility."
Talk it out
According to NerdWallet, couples will have several common arguments when facing merged finances. For example, if you have an expensive hobby you enjoy on your own, your partner might view its related expenses as something that can be cut from the budget. While you'll need to be respectful, you also don't have to give up all spending habits. Discuss your passion with your partner and consider asking him or her to participate in the hobby with you.
You may also consider decreasing how much you spend and settle on a more appropriate amount that both of you can agree on. Be honest with yourself and your partner about the personal sacrifices you are willing to make. Talking with one another is critical when it comes to keeping the peace when joining your finances.
Your financial marriage can be unique as your relationship, but ensure you and your special someone have a serious discussion about how will go about this critical aspect of getting married.
- How to roll over your 401(k) - 5/17/17
- How to teach your child to save money - 5/16/17
- Expanding your business: When to add a second location - 5/10/17
- Expanding your business: Hiring new employees - 5/9/17
- Something blue and something you didn't expect to pay for: A look at hidden wedding costs - 4/25/17