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Money and Relationships: Starting to combine your finances

Couple talking about money

First comes love, second comes the joint bank account

That first feeling of love is like nothing else. You suddenly feel a boundless energy like nothing you’ve ever felt before. You’re obsessed with this one person, a mere text from them makes your heart soar and you think of any excuse to bring them up in conversations with others because it’s clearly your favourite topic right now.

That drunk on love feeling lasts for a while, after which time, either you’re preparing to break up or if you’re lucky, you’ve moved on toward the nesting stage. And when paying to feather that nest, you’ll need to jointly pay for furnishings. You can each pay your share like you would with a room mate for a while but eventually, you’ll think about opening a joint account so that you can more easily pay your house bills or rent from the one account.

I personally have never combined finances with anyone before my current partner. We lived together for over a year before doing so and this allowed me to get a sense of who my partner was and how they handled money day to day before they could influence my credit score. If you haven’t already, it’s definitely worth talking to your partner about money so that you have a sense of where they’re up to and what their financial priorities are before you become tied up in those priorities.

For all those who have had that money discussion and are ready for the joint account, here’s 5 steps for starting to combine your finances:

1. Open a joint account

You might be tempted to plump with your current bank but if your partner is thinking along the same lines, you’ll need to evaluate which bank would best serve your needs. You’ll likely need a transactional or checking account because it’s going to be used for your everyday joint expenses or bill payments. You could also look to open a linked savings account for you to work toward shared savings goals like a deposit on a home. We don’t tend to switch bank accounts that often so take this as an opportunity to look at all available options and find the bank and product that would best serve your needs for a joint account.

2. Agree on what is a shared expense

We’re all raised with different ideas about money and it’s important to recognise that as a couple, you may have a different definition of what constitutes a shared expense. Some expenses like rent or house bills are straight forward but other expenses like grocery shopping or presents to shared friends could be open to interpretation.

This isn’t always straight forward so it’s important for you to discuss and agree on items that you would and wouldn’t spend your shared money on. Be willing to keep the conversation open as you start furnishing your home and commit to making large purchases together so that you aren’t surprised by their decision to buy designer furniture when you’re an IKEA flat pack furniture devotee.

3. Contribute regularly to your joint account

For the joint account to have any value, you will both need to contribute regularly to it. Work out what you need to contribute each week or month to cover your shared expenses and ensure that this amount is sustainable for your budget. This is a great opportunity to draw up a shared budget and a budgeting app can be really helpful to track your joint expenses and decide whether you need to adjust your contributions to the shared account over time.

4. Keep in control of your money

I’ve seen both men and women delegate financial decisions to their partner without thinking about it. The problem is that is giving up control of your money means that someone else then determines what happens to your assets or what liabilities you’ll have to your name.

You may absolutely trust your partner and perhaps it does make sense to consider your partnership a team of different strengths, in which the partner who understands more about money would make the financial decisions. I get that. But what I’m very conscious of is that not all couples stay together. On one branch of my family, every couple bar my parents is divorced or legally separated. It’s a reality I’m more familiar with and for that reason, I would treat your partner as just that – a partner who you should give an equal voice to when talking about your shared money.

5. Plan for both your retirements

You’re a partnership and if you’re committed enough to start planning joint finances, you should also start thinking about your retirements as individuals within a couple. Women around the world on average live longer but retire with less money to their name and that wealth gap is due in part to decisions around having a family, which can see women forgoing their salary and linked retirement contributions.

If a woman is good enough to give up time from her career to have your baby, consider paying into her retirement account while she’s not working so that the sacrifice made does not set her back in life. You’re in this together and that should include ensuring that one of you is not penalised for joint decisions that will benefit you both.

While love can sweep us off our feet, the sobering paperwork or online forms that come with opening a joint bank account can seem intimidating. In my experience, finding my partner has been one of the things I’m most thankful for in life and investing the time now to discuss and plan your shared money as equal partners will set you up for a stronger financial partnership over time.

Written by Kate Crowhurst

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