It's a sad but common tune: debt threatens to divide or break up an otherwise strong couple that hadn't set up any financial ground rules. Love and money don't always go hand in hand, which means it's crucial to consider the long term repercussions of sharing your life and bank account with another person. There's no magical credit card or antidebt potion, but here are some tips for keeping the communication lines open, piggy bank full, and both of you crazy in love.
Discuss and Share Your Financial Goals
Before you get married or move in together, you should tackle the tough questions so both of you know what to expect and aren't shocked years down the road. If things are really serious, make sure to discuss your savings tactics and goals, debt, plans for providing for children, and retirement plans. If you're not picking out dresses yet, discuss monthly and yearly expenses like housing, bills, and lifestyle and entertainment expenses.
Make a Joint Spending Plan
Make a spending plan, together. Combining money means you need to communicate about how it is put to use. I recommend using a money management site like Mint.com , which will categorize your expenses and give you both a realistic picture of which areas could be targeted to trim costs.
Find a Comfortable Balance
If one of you earns significantly more, talk about it instead of skirting around the difference. Figure out a fair way to cover expenses like meals and rent that works for both of you. Many of the couples I know opt for a sort of sliding scale payment plan, where you pay what you can afford instead of splitting evenly or placing the financial burden on one partner.
Save Room For Your Love
When you've gotten a handle on affording your everyday, expected expenses, begin to build up your savings in a high-interest savings account. Start putting some money toward an emergency fund and fit your monthly savings goals into your overall budget plan to avoid the excuse of not being able to afford to save.
Be Honest About Spending
Be up front about your shopping and spending habits. You shouldn't have to hide your purchases, but establish some ground rules and be honest. If you go shopping every payday and hate that your significant other makes fun of you for it, tell him. You shouldn't criticize little purchases your partner makes either, as long as they aren't adversely affecting your money. Saving is a marathon, not a sprint. There should be some wiggle room.
Manage Money as a Couple
If you are married or deeply committed, open another account just for your fixed, non-negotiable expenses, and immediately transfer the money when you're paid. Set it up so the transfer happens automatically, and neither of you will be tempted to spend that money on other things.
Being Broke Ain't a Joke
If you run into a financial crisis and regularly share expenses with your partner, tell him or her immediately. If you are codependent, it's important your partner knows what to expect and how to support you. Together you can create a plan of action, whether it means one of you taking on additional expenses, cutting back on luxuries, or making a larger life change like downsizing to a smaller place or getting an additional job.
Discuss Credit Fears and History
Many women worry about their boyfriend's credit and how it might affect their own credit if and when they tie the knot. In a nutshell, nothing happens to your credit when you get married. Your credit history is yours to keep, but it's important that you continue using the cards you already have in your name so that your credit history stays active. Your names will never appear on a credit report together — reports are generated for individuals only. However, if you and your husband open any joint accounts together, those will appear on both of your credit reports.
While there is no such thing as "our credit score," your husband's credit could affect you (but not your credit score) because both of your scores are considered when you apply for joint accounts or a mortgage loan. You might be faced with higher interest rates on these joint finances than if you applied for them on your own.
Trim Expenses Together
While being in a couple may mean you have a larger spending budget, challenge one another to trim unnecessary expenses together. Make major home or luxury purchases or travel decisions together and set an achievable goal, like a romantic weekend getaway, dream vacation, or buying a home, as an incentive savings goal.
Maintain Your Independence
You may love your partner more than anyone on this earth, but you should always put yourself first. I suggest you maintain your savings as if you were single and insure you have a rainy day stash. You don't have to be secretive about your savings: let your partner know you would like to maintain your own savings and explain why.