Ready to Merge Finances with Your Significant Other? Follow these Steps to Make the Process a Success
So, you’re ready to take your relationship to the next level. You’re starting to think about your future together and planning for what’s to come be it living under one roof or getting married.
That said, you’re likely considering combining finances with your significant other now that you’ll be sharing expenses and saving for similar goals. Here are some tried and tested tips from HerMoney’s Jessica Johnson Webb to help you successfully manage your finances as a couple.
The first thing you and your partner should do is have a serious conversation about your future and how you want it to look like. This includes agreeing on when you’ll get married, whether you’ll be having kids, and the specifics of your retirement.
When Johnson Webb combined finances with her significant other, they took advantage of the excess money they had after merging their incomes together. This meant putting more money towards their retirement fund by contributing more to their 401(k)s and brokerage account as well as building an emergency fund.
Budgeting is another important thing you should do with your partner when you merge finances. And in the process of allocating resources for your goals and expenses, Johnson Webb says that you’d likely start reevaluating your expenses more. This also means agreeing on which ones are essential and which ones you can forego to make better use of your money.
Separate ‘Fun Money’ Funds
Still, it doesn’t mean that you or your significant other should say goodbye to everything fun. Johnson Webb recommends couples to have their own individual accounts for ‘fun money’. You can earmark a portion of your paychecks and have them directly transferred to the accounts every month.
Another thing you should communicate about with your partner is how you’re going to spend bonuses and other extra income either of you may get. For example, Johnson Webb and her significant other decided to put 25% of their excess income into their individual accounts while the rest goes to their joint account. Having a set plan for allocating bonuses now would prevent possible money disagreements from happening in the future.
Because you’ll likely experience a lot of changes over the years, it’s also important to revisit your life plans as a couple every now and then. This would give you the opportunity to reevaluate your spending and see where you stand financially. Johnson Webb, for example, makes sure to look at her budget with her significant other every six months.
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