If you have been with your partner for a few years or are already living together, the urge to merge finances can be strong. Before you become engaged, though, blending bank accounts can be risky. If the relationship ends up not working out, getting your money out will more far more challenging than if you keep accounts separate. You can split the costs of joint expenses, such as the rent or groceries. If you have debts, you can focus on paying them off as a team.
Make a list of all of your separate debts, including student loans and car payments. You might wish to share your credit reports with each other, so that you are completely honest. Have an open discussion about your debts and develop a plan to pay off your debts. You do not need to share responsibility for your individual loans, but you should support the financial goals of one another.
Discuss your monthly incomes. Before you take a big step such as becoming engaged or moving in together, you need to know how much you each earn. If you are planning to rent an apartment together or ultimately buy a house, you need to be able to set an affordable monthly budget.
List all of the joint monthly expenses you expect if you do not already live together -- or the expenses you have if you do live together. Expenses usually include your rent, groceries, cost of utilities, entertainment and dining out, and transportation costs. Include personal expenses in the list as well, such as the cost of getting your hair styled, yoga classes or going to the gym.
Determine a way to split expenses that works best for you and your partner. For example, if you earn 30 percent more than your partner, you might want to be responsible for 30 percent more of the expenses. Another option is to be responsible for the rent each month, while your partner covers the groceries and utilities. Despite income differences, some couples prefer to split all expenses equally. Discuss the option that makes you most comfortable with your partner.
Make a savings goal together. For example, you might each want to start a retirement plan if you have not already. You might also want to start saving for a vacation. Before you become married, keep your savings separate. If you do end up getting married, you can start a joint emergency fund or retirement plan.
Items you will need
- Credit reports
- Consider visiting a financial counselor to discuss your money concerns before you become engaged. Opening up about finances with a significant other can be difficult for many people. A counselor acts as a mediator and might help make the discussion easier.
- If you rent an apartment together, make sure both of your names are on the lease. You should both be responsible for the burden of the apartment in case the relationship does not work out. You do not want to be left shouldering a monthly rent you cannot afford on your own.
- Jack Hollingsworth/Photodisc/Getty Images