Love and money – it’s an explosive combination that accounts for plenty of conflict in a relationship. So, how do you go about talking with your significant other about finances? And what should you even talk about?
Okay, well, first you want to settle down. These sort of conversations need to happen when you’re both in a collaborative, not combative frame of mind. Once the mood’s right, you’ll want to discuss…
Current financial status
Relationships are all about honesty, right? So start off with candidly discussing what your current financial status is. That means outlining your salaries and other incomes, as well as any nasty debts hiding in the closet.
Also, list other household expenditures, particularly if you’re co-habiting and intend to consolidate your finances. You’ll be able to spot savings and unnecessary expenses that come from living together.
While you’re at it, get all that information down, so you can assess and plan your overall budget.
Future plans, dreams and goals
Where do you see yourself in five years time? It’s not just the sort of question you get asked in interviews; it’s a serious assessment of what you both want out of life and, more importantly, how you’re going to pay for it.
You might dream of seeing the world, or settling down in a cottage and having two lovely children. This discussion allows you to figure out what the pair of you can accomplish with the budget you’re currently on, and what adjustments will have to be made – from pulling in your horns at Christmas, to training for a higher paying job – in order to meet your ambitions.
Speaking of maintaining budgets, do you even have one? Do you always-always-always pay bills on time by Direct Debit? Or are you the type to pay them off as and when, while buying the latest must-have item (even if you hate your lack of discipline afterwards)?
Whatever your spending habits, chat about them with your partner, and find out what their habits are too. For instance, if you find you’re both reckless spenders, then you’ll need to figure out how to bring restraint into the relationship.
Of course, if one of you is particularly good at staying on top of finances, then it’s time to discuss…
Who’s in charge?
In most households, one person is in charge of the overall finances – even if both parties are earning. Figuring out who’s in charge of your household budget is important for two reasons: It means at least one of you has an eye on the finances at all times, and you can work together to set up automatic bill payments and ensure everything goes out once your salaries are paid in.
However, the purpose here is to lay some boundaries, such as who has final say on larger purchases and just how free you both are to manage your money. That leads to the biggest discussion of all…
Joint and solo bank accounts
Having a joint bank account is the adult version of going ‘Facebook official’. Congratulations, you’re in a serious relationship. But does that mean, just because every other couple seems to do it, you should too?
In a word: No. You and your partner need to make the decision that’s fit for your finances. It’s certainly not a barometer of the love you share, but it’s worth pointing out that having a joint bank account does have financial ramifications should the relationship breakdown in the future – as such, you’ll want to be fully committed to the relationship before even considering this step.
One big advantage is, since you’re sharing an account, both incomes and expenses go out of one account, making it easier to track your finances, as well as sharing the burden together – in other words, some couples find it stops arguing so much about money.
Another good thing about joint accounts is that, if you’re both saving into one account, the pot grows a little faster. On the other hand, it takes a huge amount of trust to share finances, since you’re both liable for any credit purchases made or debts due.
What some couples find is that the best of both worlds is to open a new account for payments that cover the household budget, while keeping their primary bank accounts separate. Win-win.