Love & Money: Yours, Mine & Ours?

If you and your sweetie have commitment on your minds, it’s important to remember that it’s not all just about romance. You may believe you’re ready to join hearts and lives, but what about finances? Even temporary roommates need to set some ground rules regarding who pays how much of the rent and bills, and when those payments are due.

Without a plan and cooperative partners, home life becomes uncertain and full of friction. That’s not the ideal way to start a marriage, to say the least.

Financial Options for Couples

Couples starting their lives together typically have several options. One option is to merge their accounts and assets and hold everything jointly. This can work well for committed couples who want to work as a team in everything, including their finances. Couples can also opt to keep their finances separate. Those who view their relationship as temporary, or who simply want control over their own money, often choose this option.

A third option is to hold some accounts jointly and some accounts separately. For example, a couple planning to marry and buy a house together could retain their established personal bank accounts, but also open a joint account from which to pay family bills and expenses. The joint account is maintained by each spouse depositing an agreed-upon amount from their paychecks. They can save for a down payment on a house following the same method. The remainder of their cash stays in their own accounts to use as they see fit. Even so, the couple will need to agree on which expenses come from which account. Is clothing a personal expense? What about car maintenance or shampoo? It’s best to clarify ground rules up front.

The Importance of Planning

Finances can be an emotionally charged subject even in the best of circumstances. Without sitting down together as a couple and working out a financial plan, however, conflict and misunderstanding are more likely to ensue. Regardless of the method a couple chooses, they will need to work out who pays which expenses, how much they will put toward saving for the future, and how they will make decisions.

Those who hold only joint accounts have an advantage in this respect, because each partner has access to the finances and neither can keep their spending habits hidden. There are no questions to answer about who pays for what, because all payments are made from the same accounts. But even with this transparency, trouble can result if both partners are not committed to following their spending plan. With a joint account, it only takes excessive spending from one partner to decimate the family finances.

Separate accounts can create problems of their own. Without a commitment from both partners to work together for the financial good of the family, it’s all too easy for someone to become stingy or secretive with their own resources, or to take offense if they sense the other isn’t playing fair. Once separate budgets and spending habits are established, it can be difficult to turn around and reallocate personal funds to save for a common goal such as a new television or a dream vacation.

Should You Merge Your Finances?

The method that works best differs for each couple. Current financial circumstances, spending styles, and long-term commitment all play roles. What most affects the success of any method is whether the parties involved work together, contribute fairly and compromise when needed. Interestingly enough, the same principles that guide a successful relationship can also guide a successful financial relationship.

Neil Davis is a tax consultant and in his spare time blogs for workingtaxcreditcalculator.co.uk a site which can help you with your tax credits 2012. Stay up to date on how the latest changes to working tax credit may effect you! 

Share |