Joining your life with another person means sharing everything—your dreams, your life goals—and your credit scores. Before you head down the aisle, make sure you and your partner have a clear-eyed view of your finances, your goals, and your attitudes toward money.
Talk about your finances
Be open about your debts, income and investments. Plan a time when you can both settle in with a calculator and your financial records. Total up your individual assets, including all sources of income, investments, trusts, and property; and your debts, including credit cards, student loans, car payments, and mortgages. Have either of you ever declared bankruptcy? Show each other your credit scores. Don’t hold back. No judgments allowed―you’re aiming to get a clear assessment of where you stand.
- Figure out what money means to each of you. What experiences in your lives have brought you to your individual approaches to money? How does this influence your financial behavior? How does it affect the way you balance your financial, career, and relationship goals? Once you've come more to terms with your feelings about money, it will be less difficult to make financial plans and resolve financial problems.
- Decide out how forthcoming you will be about purchases. You don’t necessarily have to agree on or divulge the cost of every purchase, but you should discuss significant budget factors to maintain trust. Many couples find it better to leave most personal expenses up to each partner while setting a dollar threshold to trigger consultation about particular or cumulative expenditures. However, couples who are in financial difficulty do need to take a close look at all of their individual expenses.
Combining your financial styles
Understand your and your partner’s attitudes toward money. Think honestly about whether you’re a saver or a spender, an impulse shopper or a planner, a cash-only, or credit-card buyer. How do you feel about carrying debt? Are you someone who wants to control the family budget, bill-paying, and accounting, or will you want your partner to handle that? If your styles are miles apart, it shouldn’t be a deal-breaker, but it’s definitely something to be aware of. It may be a red flag for money challenges in the future if you can’t talk it through. Remember, if one of you runs up big debts on jointly held credit accounts, you’re both responsible for paying them.
Determine your financial roles
Determine who will pay the bills, how you will pay them and who will keep track of the finances. Experts suggest involving both parties to some degree, so one person is not solely in charge and so both parties are aware of household finances. The main goal is for you both to participate in major decisions and that you're both well informed about your financial situation.
- Get organized. Gather all important financially-related documents in a central location that is equally accessible to both partners and decide what kind of system you will use to keep things organized. Personal financial software is helpful for keeping your finances organized and archived.
Get down to dollars and cents
Decide whether to blend your incomes or keep separate “yours,’’ “mine,” and “ours” checking accounts. Having at least one joint account makes bill-paying easier, but you may want to set up individual accounts as well for personal spending.
- Build an emergency fund. You never know when you will need additional cash, and you should try to build up three to six months of living expenses in a readily accessible savings account or money market account.
- Size up your safety net. Periodically review your health, disability, life, homeowners, vehicle, and personal liability coverage to make sure you're both adequately covered.
- Update your paperwork. Redo your wills, change beneficiaries on life insurance, pension plans and other contracts, and give each other a durable power of attorney and medical power of attorney so you can each act on behalf of the other in an emergency.
Budget, budget, budget
Work out a budget or maybe even three—one for you, one for your partner and a shared budget for your household and entertainment needs. Find a plan that works and feels comfortable for both of you—and don’t forget to include savings for your emergency fund and your retirement. If either of you has debts, develop a plan to pay them off.
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