Partnering up for success: Money management for couples

Whether you are in a committed marriage or you’re in a long-term live-in relationship with your partner, it is important to establish your financial identity as a couple. Not only is this a great way to avoid big fights and tough conversations in the future, it can also help set you up for a financially stable and even abundant future.

So read on if you want to learn how to manage finances with your present or potential partner:

It always starts with a conversation:

When it comes to navigating joint finances, the first step is to learn each other’s habits and preferences about money. This means that you and your partner need to have transparent conversations about your individual incomes and expenditures; savings and debts; assets and liabilities, as well as your financial goals.

A conversation about money can be uncomfortable at first, but it can also help establish honest and healthy communication in your relationship. Remember, your life partner is not your roommate, so you will need to figure out logistics like who pays for what and plan out your financial goals in detail. Doing this early on will help you sidestep many fights with your partner in the long term.

Use a healthy mix of joint and separate accounts: Some couples might prefer separate bank accounts, while others rush to combine all their finances and operate as a financial team. But you don’t need to choose between joint and separate accounts. In fact, it is advisable for couples to incorporate both types of accounts into their financial relationship.The idea here is that there is a separate account for joint expenses like loans and bills, but each partner also has a personal account for individual expenses. Some couples prefer when both partners’ salaries to come into a joint account, and a pre-decided amount goes into both personal accounts. This is an ideal solution for couples who want to work on joint financial goals while keeping some wiggle room for individual expenses.

Embrace the power of joint loans: Say you want to apply for a home loan, but you are not eligible for one reason or another. In such a case, you could consider applying for a joint loan with your partner. This offers a myriad of benefits, including higher loan eligibility and additional tax deductions as well. Some loan finance companies even offer special interest rates to women applicants, which is another reason to consider a joint home loan. However, to avoid any issues, it is best if both applicants are co-owners of the home.

Divide and conquer: While it is commonplace for only one partner to control the money, this can be detrimental to your relationship as well as your joint finances. Instead, you and your partner should consider sharing the monetary load and be co-active participants in your financial journey.

If you and your partner earn similar salaries, it might be easier to decide on a budget and just split the financial load evenly. But if there are income differences, you might consider splitting expenses by a percentage of your and your partner’s salaries. Another way to go about dividing financial responsibilities is to assess personality and convenience. For example, the partner who is more timely with payments can pick up loan repayments etc., while grocery bills can be paid by the partner who actually does the grocery shopping.

Plan ahead together: It is crucial that couples discuss their plans for the future because their financial future depends on that as well. This includes larger financial milestones like family planning, estate planning, and insurance, as well as more short-term expenses like foreign trips and medical conditions.

For example, if you are planning to have children, you will have to make sure you already have or will earn enough money to sustain that big life change. Not only will you have to plan expenses for a newborn baby, but also for other related costs of having a child like a bigger home or their potential school fees.

Create your own rules: In all honesty, there is no cookie-cutter formula for how couples should manage their money. Every couple’s financial situation is truly unique, so try not to feel pressure to fit into any money management model. Figure out what works for your finances and your relationship, and create a financial plan that works accordingly.