When it comes to managing finances with a partner, it can more often than not become a source of headache for many. As the saying goes “money makes the world go ‘round”, it is understandable that money can become a point of contention for couples. Money, being of utmost importance, can solve problems and make great things happen. So what happens when the finances between you and your partner have been the cause for heated arguments recently, and you’re at a loss of how to work things out? If this sounds all too relatable, you can rest assured because we’ve got you covered — read on more to find out whether you should manage your finances separately or jointly with your partner.
Everyone Is Different
First, you must recognize that not everyone has the same attitudes when it comes to money. We all spend money differently and this all depends on our set of priorities. Similarly, not every relationship works the same as others. What works for your friends’ marriages may not work for you, so its best to access the dynamics between you and your partner before coming up with a solution — but first things first, find out where the disagreements lie so you’ll know how to work on it.
Knowing Your Partner’s Credit History
Even if the love of your life has a bad credit history, you won’t need to worry about it — not until you’re sharing an account with him/her. Its recommended for both of you to check out your respective credit ratings before deciding to share an account; this will save you the hassle of being burdened with unnecessary financial problems and adding to your marital issues.
Being Able To Trust Each Other
Sharing an account means that both parties are accountable to each other for any overdrafts and debts, so it’s extremely crucial for the two of you to trust each other. Be clear as to what contributions you’re both making and remember to stick to it. Then, review it if necessary. This will ensure that the two of you can carry out your financial responsibilities as well as possible and leave little room for financial arguments.
Setting Your Limits
It is important to set out your expectations, such as a spending limit and/or a fixed amount to input into the joint account every month. This will not only ensure that both of you will be able to contribute fairly to the account, but it will also give you two the financial independence you need -— so long as its within the set agreement.
Both parties need to be fully aware of whatever agreement is going on. In the event that either of you isn’t particularly keen on upholding the financial agreement, the two of you need to sit down to talk things out. Neither partner should have absolute control over the join finances; this would be a recipe for disaster. Plus, if both parties are fully aware of whats going on in the finances, you’ll both be ready to take charge of the join account if something were to happen to the other partner.
Being Open to Communication
As difficult as it is to open your mouth and talk about the troubling “M” word, you’ve absolutely got to do so. Money is important to you, your partner and your future; so whenever you feel like it is necessary to talk about it, by all means, you should. If it’s stressing you out, you can seek help and understanding from your partner and sort money matters out together.
The Four Ways To Manage your Finances
Here are four ways that couples can manage their finances. While it isn’t exhaustive, it surely serves as a great reference point for couples to plan out their financial matters.
1. Separate Accounts
Plan out who manages what finances in the household and communicate as much as possible. This will ensure that you and your partner will know what’s going in and out of each other’s accounts and that the bills will be split comfortably between the two of you.
2. Sharing Everything
If you decide to share everything, all you need to do is ensure that your spending patterns complement one another and that there’s an agreeable spending threshold that the two of you will uphold. This method will make budgeting easier and its relatively easier to manage the finances when both parties both have access to it — though, this will only work out if both of you are accountable for your actions.
3. Dividing It All Distinctly
Have an account for shared bills, another account for what’s yours and whats his/hers. This particular method allows partners to portion their finances and decide what bills should be paid from the shared account. Then, any bills that shouldn’t be under the joint account can be paid by the individual himself/herself. This will save you and your partner any possible arguments over unsaid agreements and assumptions about who should be paying for what.
4. The Allowance Rule
Marriage is a contract, so if one partner is busy taking care of the kids while the other is at work, there needs to be an agreement that the breadwinner pays the house-partner an allowance. This way, both of you can still keep separate accounts and manage your finances without having to put the money into one shared account — this will ensure that the breadwinner has the deserved control over his/her finances and the household finances can still be managed properly.
In order for you and your partner to make the best financial decisions, the two of you can work towards preventing financial problems from occurring. Here are three ways that you can go about doing so:
1. Avoiding Joint Debts
Having joint debits means that both of you are responsible for repaying back the full amount. Thus, before you agree on any joint debts, make sure that the two of you are agreeable to it if not one of you will have to singlehandedly shoulder the burden and this will put a strain on the relationship.
2. Keeping Your Credit Cards Separately
Ensure that your partner can be trusted to be one of the authorized users on your card. If not, consider canceling that authorization because you won’t want to deal with an unexpected and unmanageable bill incurred by your partner’s spendthrifty ways.
3. Protecting Your Credits
To be financially linked with a person who has a bad credit rating can affect your own credit rating; this can make things troublesome if you’re trying to get a new credit but your credit history is marred by your partner’s bad records. Hence, if possible, find out more about your partner’s credit history before deciding to join up your bank accounts, loans, and bills.
A financial partnership is never easy to manage, especially if it concerns you and your spouse. It’s easy to take each other for granted and when this happens, communication starts to become flawed. Therefore, remember to be open to communicating, such that both of you will be more open to discussing financial matters even before matters start to get pressing. Last but not least, just like relationships are constant work, your financial relationship with your partner and the bank is something that should be consistently managed as well. Don’t wait till its too late to speak your mind and remember to be willing to work things out — after all, the two of you are responsible for the financial situation that you’re both in; if one suffers, the other partner and the relationship are likely to take a hit too.