Money doesn’t have to be an uncomfortable topic in relationships, provided you and your spouse communicate openly and plan for the future. Experts agree that it’s a good idea to sit down with your partner and outline your financial priorities, especially before moving in together or tying the knot. Here are several ways to budget and plan your finances:
Split the household expenses
Sit down with your partner and discuss how you’ll handle the bills. Decide who will be responsible for what and consider opening a joint checking account to pay the bills. Communication is key if you decide to combine your assets in one checking account, so if you are bad at keeping track of checks and withdrawals, setting up your own account is probably the best idea. It’s also a good idea to have one person pay the bills every month to avoid duplication. Establish a schedule to keep track of responsibility and keep revising your plan until you find a system that works best for your relationship.
Discuss your debt
It’s a good idea to discuss your financial past with your partner, especially if you’re preparing to rent an apartment or buy a home together. Honesty is often the best policy. Have you filed for bankruptcy? If so, make sure your partner is aware. Disclose your credit history, student loans and other debt. You can obtain a recent credit report online that will help you get started. Keep in mind that your credit score will improve if you pay off your credit card balance each month.
Compare your spending habits
Understanding your partner’s spending habits is crucial to building trust and communication. The Financial Planning Association recommends creating a budget to help plan your finances. Allocating what you and your partner are permitted to spend will keep track of discretionary purchases. Deciding beforehand how much money can be allocated to essentials and luxuries can alleviate judgment.
Get a joint savings account
You may want to consider opening a joint savings account to save money for big expenses, such as a vacation or a home. With two people putting funds into the account, you will reach your goals faster and easily meet minimum balance requirements. Also, if something unforeseen happens to your partner, you would be able to access the funds.
Look to the future
It’s never too early to start thinking about retirement. Try to save 15% of your gross salary for retirement. Examine your assets in your 401(k) plan or other investment accounts and discuss a plan for the coming years. Make plans for how your assets will be handled after your death and make sure you have a will. It’s also a good idea to revisit your financial goals every year or two to see what has changed. Finally, set a little aside for unexpected emergencies, like accidents or illness.