Your Guide to Combining Finances with Your Partner

TL; DR

Discussing money in relationships is crucial, even though it's often avoided. Money is a tool, not a source of happiness, and addressing financial matters can reduce stress and improve your connection. Start these conversations early, address spending habits, and create a shared financial plan. Understand each other's financial histories, clarify your financial goals, and consider different approaches to combining finances. Open and ongoing communication is key to a harmonious financial future together.

Relationship & Money

Growing up, you may have been taught that discussing money is a social taboo, especially with friends and family. Today, however, we encourage you to break that rule.

Financial discussions are more important than ever in an era of rising living costs, stagnant wages and economic uncertainty. The impact of these conversations can reduce stress and anxiety, especially for those who are already struggling financially.

As Benjamin Franklin wisely said, "Failure to plan is planning to fail". This sentiment resonates deeply when it comes to managing finances within a relationship. Whether you're new to a partnership or have been together for years, how you manage your finances can profoundly affect your journey.

Traditionally, money has been a subject shrouded in secrecy and discomfort. Many people are reluctant to discuss financial matters, as evidenced by the surprising fact that 44% of individuals feel embarrassed, anxious, upset or ashamed at the mere thought of talking about money. Astonishingly, 21% of people would rather discuss their ex-partners with their current partners than about money.

You might ask, "Why should I discuss money with my partner?" The answer is simple but profound: Money is a powerful tool that shapes our lives and enables us to pursue our dreams, but it doesn't define love or happiness. Instead, it serves as a resource that allows us to choose how we invest our time, energy and, ultimately, our lives.

So why have conversations about money? Let's take a closer look at the importance of these discussions and how they can improve your relationship and your financial future together.

Talking about the relationship and money connection

Money is often a source of conflict in relationships. However, discussing and aligning your spending habits can strengthen your bond. This includes everyday expenditures as well as significant investments.

While separate spending accounts can be a solution, transparency is key. Be open about how much money will be kept separate and your expectations regarding communication about these accounts.

• Early conversations: Shockingly, couples often say "I love you" to each other four months before initiating a conversation about money. Starting these discussions early can promote better financial understanding and reduce conflict later.
• The root of disagreements: Disagreements about spending habits are typical of relationship conflict. You can strengthen your relationship by defining how you'll manage money, from everyday expenses to significant purchases.
• Money as a tool: Remember that money is a tool, not a source of happiness or affection. It is important to see money as a means to achieve your goals and create the life you want together.

Exploring your financial history

Everyone brings a unique financial history to a relationship. Understanding and discussing these histories is essential to avoiding surprises and building a solid financial foundation together. Consider these aspects:

• Debt situation: Does one partner bring a significant credit card or student loan debt to the relationship? Discuss how you'll manage and pay off this debt together.
• Windfalls or inheritances: If one partner has experienced a significant financial windfall, determine how these funds will be managed within the relationship.
• Income disparities: If one partner earns significantly more or less than the other, or if one partner doesn't work, decide how you will share financial responsibilities fairly.

Clarifying your Why

Money is often a significant source of stress and conflict in relationships. However, discussing financial matters openly can help alleviate these issues and pave the way for better financial decisions that benefit both parties. By addressing financial concerns head-on, you can work together to find solutions that promote harmony and understanding.

Talking about money can be enlightening in more ways than one. It provides insight into each other's values, priorities and long-term goals. These discussions can deepen your connection as a couple by allowing you to understand better what matters most to each of you individually and as a team.

Dealing with money issues together allows you to create a comprehensive financial plan. This plan can cover various aspects of your financial future, such as setting retirement goals, saving for a home and managing any existing debt. By developing a financial strategy together, you can work towards common goals and build a stable and secure future together.

When your partner won't talk to you about money

While you and your partner may share many interests, different attitudes to money can strain your relationship. Talking about finances is essential, even if it's emotionally charged because of past experiences or concerns about control.

• Simplify budgeting: Create a basic budget for essentials and discuss discretionary spending together.
• Use cash for discretionary funds: When cash is gone, spending stops, reducing nagging.
• Avoid blame: Frame discussions as a joint effort to achieve common goals, not as judgements about spending habits. This encourages productive dialogue.

Let's dive into the How section

Create a shared financial vision

Both partners must agree on short-term and long-term goals to successfully combine finances. Decide how much each person will contribute to the household finances so that both feel financially secure. Decide how funds will be allocated between essentials and discretionary spending.

Take an inventory

Make a comprehensive list of all financial accounts, assets, liabilities and insurance policies. This should include current accounts, dormant accounts and beneficiary designations on accounts such as life insurance and retirement plans.

Create a budget

Create a detailed budget that covers both joint and individual expenses. Include emergency funds to build a financial cushion. Discuss daily expenses and major purchases to ensure both partners are comfortable with the budget.

Choosing a financial approach

There's no one-size-fits-all approach to combining finances. Some couples treat all funds as joint property, merging accounts and spending. Others prefer a "my, your and mine" strategy, keeping some finances separate. The pro-rata method divides expenses based on percentages of income. Find out what works best for your relationship.

The importance of openness

Research shows that couples who combine all their finances tend to be more satisfied with their relationship and less likely to separate. However, maintaining an open and honest dialogue about finances throughout your relationship is crucial.

Maintain a financial safety net

Set up and contribute to a joint financial safety net covering several months' expenses. This will ensure financial stability in unexpected circumstances.

Share responsibilities

Distribute financial tasks and responsibilities fairly between both partners. Ensure that both people understand and can manage their finances independently to avoid financial dependency and potential discord.

Unite your wealth and your future

Merging your finances with your partner can be a gratifying and strengthening experience for your relationship. It's a journey that requires patience, trust and ongoing communication. You can build a solid and harmonious financial foundation by reviewing your financial history, clarifying your financial goals and creating a shared vision for your financial future. Remember, there's no one-size-fits-all approach, so discover the strategy best suits your unique relationship dynamics.

Wealt: Your partner in wealth

Wealt allows you to integrate all your financial accounts into one central dashboard seamlessly. This allows you to effortlessly monitor, track and plan for the optimal version of your financial life. Say goodbye to intermediaries and cumbersome spreadsheets and usher in a new era of financial empowerment.