As a couple, whether you have been living together for a while or you recently decided to take the relationship to the next level, you have to manage your money efficiently. Personal finance is one of the most common causes of separation. So for those of you who still consider money as a taboo topic, here are 6 essential pieces of advice to help you manage your finances in a relationship:
- Get your financial goals together: living happily ever after implies you have to plan for your future. Where do you envision your relationship 5 to 10 years from now? In a brand new property with three kids, owning a small business or backpacking around the world? How much will it cost you to get married or to raise children? All these questions will greatly affect your finances. Therefore, setting your individual and common goals early enough will help you better manage your expectations.
- Communicate about each other’s budget: Doing a budget on your own is great, but sometimes you have to reconcile some numbers to ensure you are on track to realizing common projects. For example, you may need to share your salary and savings information to ensure you will have enough money put aside to buy that new house next year. However, some partners don’t like having their transactions scrutinized. For those who are sensitive about their privacy, I suggest opening joint savings and checking accounts to track your common transactions.
- Pool your expenses: Being in a relationship may result in a cheaper lifestyle than being single. Think about all the rebates you can get by accumulating points on a common reward card. For example, my partner and I get free movies faster by using the same Cineplex card; we also get frequent sales on dietary supplements using his GNC card. The same applies to groceries; shopping items and flight tickets. As a couple you can also save money by moving in together. Common expenses like rent, electricity and cable can then be split in half or as a function of individual income. However don’t let monetary contributions define who has more power in the couple. Remember, contributing to a household’s well-being goes way beyond signing checks every month.
- Take advantage of tax credits: By moving in together, you can take advantage of tax benefits, like IRS deductions, tax-deductible IRA contributions and child tax credits (if you have kids together). Also some unused tax credits can be transferred from one partner to the other.
- Stop keeping up with the Joneses: Your neighbors drive a Mercedes and you drive a Honda; they send their kids to private school while yours go to public school; they celebrate in fancy restaurants while you host pizza-and-monopoly parties. And you know what? That is completely okay. Don’t try to live above your means by spending money you don’t have. Indeed, with the overabundance of credit products in today’s economy, many couples have ruined themselves in the pursuit of a lifestyle they could not afford. It is important to always control your joint expenses and avoid deteriorating both of your credit scores because of bad spending habits. Don’t try to keep up with the Joneses.
- Discard your pre-conceived ideas: Still today, relationships and money management are both culturally and gender-driven. Therefore in many countries where men are expected to provide for women, it can be hard to conceive of a society where ladies are consistently handed the check in a restaurant or where John goes to work while his husband Marc is a stay-at-home dad. However don’t let age-old traditions on one side or a strict 50-50 split mentality on the other hand get in the way of the financial decisions that best suit YOUR couple.
About the author: Meinna Gwet is the founder of Bobbyfinance.com, a financial literacy blog dedicated to young professionals and beginning entrepreneurs. She frequently writes about personal finance, business and economics in a way that is accessible to ordinary individuals. You can follow her on the platforms below: