You’ve found the person you want to spend the rest of your life with, and now you have to actually figure out how to live with them in harmony. If you want to have a long-lasting union, you’ll need to be on the same page when it comes to your finances. One survey found that 95% of married adults thought “financial responsibility” is important when considering a spouse, trumping attractiveness and other traits.
But even if you have a similar money philosophy as your significant other, it can still be difficult to make all the right money choices. For one thing, there’s quite a number of decisions that need to be made all at once, especially if you’re planning to move in together or get married. And while most financial missteps can be remedied with time, it’s easier on your wallet to avoid them altogether.
Let’s take a quick look at some of the biggest mistakes couples make regarding their finances, and use them as a how-to guide for avoiding the worst of your possible money pitfalls.
1. You don’t talk about money – ever
All’s fair in love, and this should include being able to bring up discussions about your finances. If you’re able to have open conversations about money, you’re more likely to ward off the stereotypical bickering about the budget. This is especially important to do before you move in with your partner, or before you get married.
For one, a partner’s low credit score could impact your chances for securing a favorable interest rate on a mortgage or other loans – something you should at least know about before taking the plunge. “You’ll also be more likely to fight about budgeting, saving and spending habits,” Kiplinger notes.
“How money was handled in the past will often influence our spending personalities and how we handle money now, which is why it’s important to understand our partner’s money history,” advises Debra Pangestu for MyMoneyCoach. You’ll have a chance to be honest about the debts you’re bringing into the relationship, and learn about the ones your partner might have. As U.S. News and World Report points out, having the money discussion early is one of the best ways to create common savings goals.
If you’re not sure about how to start that conversation, check out the money questions you should ask before you become seriously committed.
2. Only one person is responsible for your finances
One of the biggest perks of being in a committed relationship is that you gain a teammate. But when it comes to managing finances, many couple’s teamwork starts to break down. If only one person is devoting time to your collective finances, it means that the other might have a much murkier view of what’s going on — and leave the money-managing person feeling resentful for taking on all of the workload.
At the very least, Kiplinger advises a regular check-in meeting where both of you go over your finances together. Call these “money dates” if you need to, but no matter what set aside some regular time, normally at least once per month, to touch base about your financial decisions. Not only will this make sure you both know where your money is going, but it will prevent the pitfall of feeling like you’re asking your partner for permission to spend the money you earned.
“I call it ‘Mother, may I?’ You don’t want to get into that position where you’re the little girl, or you’re the little boy, and the other person is your parents,” relationship therapist Bonnie Eaker Weil told U.S. News & World Report. “You want to have your own money, and certain things are guilt-free, and you just do what you want with it.”
3. You rush the decision about merging bank accounts
Merging all of your money into one joint account after you get married or become cohabiters seems like the romantic thing to do. But if you rush the decision with your partner, it could make things more complicated in the end.
The most obvious reason is that a joint account makes dividing assets more difficult in the event of a breakup. It’s also easy to argue about one spouse’s expenses when they’re draining a mutual account, not just their own piggy bank. When you’re making this decision, remember that you have multiple options. Some couples choose to keep everything separate, others keep their personal accounts but also create a joint account for household expenses, and others choose to create a completely joint account.
“Married couples should try different ways of handling the money to see what works for them,”Ginita Wall, CFP and co-founder of the Women’s Institute for Financial Education, told KeyBank. Many couples decide that merging all of their accounts eventually makes the most sense, especially when paying for a mortgage and the expenses that come with having children. “But unless you’re both comfortable with the idea, there’s no need to rush things,” KeyBank adds.
4. You keep money secrets from each other
If you have regular money meetings to discuss finances and you’re honest during them, this shouldn’t be an issue. But for one reason or another, many people report keeping a significant spending habit from their significant other. About 13 million consumers in the United States have kept a financial account hidden from their spouses, and about 20% of the population has spent $500 or more without telling their significant other.
“So many couples are hiding money or debt or charges and then the spouse finds out and its war in their marriage,” Perry Higgins told Forbes.
Whether you’re paying child support for offspring you never mentioned or you can’t get your spending habit under control, a committed relationship is no place to keep money secrets. If you or your spouse is hiding thousands of dollars, it might be wise to seek the help of a family finance professional, said Mary Claire Allvine, author of The Family CFO. “If this happened in a company, they’d call it embezzlement,” Allvine told KeyBank.
“Communication is Job One in the survival of any relationship, and if you can’t bare your financial soul to your partner, if you can’t trust that person to tell you the truth, you should not be getting married,” writes Gail Vaz-Oxlade, personal finance writer and creator of the site Debt-Free Forever.
5. You don’t save for emergencies
If you and your loved one haven’t started saving for emergencies, you’re not alone. One Gallup survey shows that 48% Americans can’t afford an emergency, and another study found that 2 in 3 Americans don’t have $500 to cover an unexpected car repair or hospital visit.
Still, you’re asking for financial chaos if you can’t work together to save up for emergencies. In some cases, that rainy day fund can keep you from financial disaster. Otherwise, you risk running up your credit tab and accumulating debt that snowballs past the point of recovery.
To avoid that, talk with your partner about the best way you can start to build up an emergency savings fund. The beginning steps don’t have to be huge, but you’ll be thankful you took the time to pay yourself when trouble inevitably comes knocking.
6. You ignore the details
Whether you are dating, married, or just starting to know each other, it’s important to figure out who will pay for things and when. Men are not necessarily in charge of every restaurant bill anymore. If possible, figure out who is paying ahead of time when you go on a date, or split the bill. If you are living with someone or married, sit down and figure out who is going to pay for which bills (if your money is still separate), or when bills will get paid and who is going to keep track of them (if you are married or have joint finances).
Also figure out how much you want to save and what your future goals are together. If you regularly wing financial decisions, you may find that you fight more often, and that your relationship takes a hit.