Navigating finances as a couple is exciting––and challenging. Combining your financial resources can strengthen your relationship and pave the way for a prosperous future, but doing it the right way is easier said than done. In this guide, we’ll explain how you can effectively merge finances and create a financial wellness plan that works for both partners.

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Starting a Transparent Conversation

The foundation of any successful financial partnership is open communication. Discussing your financial history, current situation, and future goals with your partner lays the groundwork for trust, mutual understanding, and general financial wellness. Here are some key points to cover in your initial conversation:

Income

Discussing income can help paint a picture of your household’s cash flow. By being transparent about your individual earnings, you can work with your partner to allocate money for shared expenses and savings. This also helps set expectations around budgeting and discretionary spending.

Debts

While it may not be the most comfortable topic, it’s important to have an open and honest conversation about debt. Talk about what debts you have, including any student loans or medical bills, and create a plan for paying them off. Aim for a debt-to-income ratio below 43% (ideally, 36% or lower). 

Assets

Assets include everything from savings accounts to real estate. Knowing what each person brings to the table helps couples decide how to pool resources or keep things separate, whether through joint or individual accounts.

Financial Wellness Goals

Do you want to buy a home? Start a business? Save for retirement? Then have a conversation with your partner. You may just find that you’re aligned on certain goals, which can make the process of achieving them so much easier.

Choosing the Right Approach to Merging Finances

There isn’t a one-size-fits-all approach to combining finances. Couples can choose from several methods, each with its own advantages and challenges. Here are some popular options.

Joint Accounts

Opening a joint bank account is a common way for couples to achieve financial wellness together. This approach simplifies bill payments and creates a sense of shared responsibility. Be sure to maintain open communication and keep accounts accessible to both parties. 

Separate Accounts

Some couples prefer to keep their finances separate, maintaining individual bank accounts while sharing certain expenses. This method can provide a sense of financial independence while still allowing for joint financial planning. Establish clear agreements on how shared expenses will be covered.

Hybrid Approach

Looking for the best of both worlds? A hybrid approach combines elements of both joint and separate accounts. Couples may have a joint account for shared expenses, such as rent and groceries, while maintaining individual accounts for personal spending. 

Building a Comprehensive Financial Wellness Plan

Once you’ve decided on the best approach to merging finances, it’s time to create a detailed financial wellness plan outlining your financial goals, budget, and strategies for saving and investing. Here are some steps to guide you.

Set Clear Financial Goals

Start by defining your financial goals as a couple. These can include short-term objectives, such as saving for a vacation, and long-term goals, like buying a home or retiring comfortably. Be sure to set SMART goals (Specific, Measurable, Achievable, Relevant, Time-bound) to stay on track.

Create a Budget for Financial Wellness

There are so many ways you can create a good budget, but it’s always best to start by listing your income sources and categorizing your expenses. Separate your fixed costs (like rent and utilities) from your variable expenses (dining out, entertainment, and so forth). 

Establish an Emergency Fund

There’s no way around it: you need an emergency fund, and a solid one at that. Aim to save three to six months’ worth of living expenses in a separate, easily accessible account. This cushion can help you navigate unexpected financial challenges without derailing your overall plan.

Invest Wisely

Investing is an important part of building long-term wealth. Consider working with a financial advisor to develop an investment strategy that aligns with your risk tolerance and goals. Diversify your portfolio by investing in a mix of stocks, bonds, and other assets.

Checking in On a Regular Basis

Financial wellness is an ongoing process. Even after building and implementing a merged plan, it’s important to revisit your strategy from time to time to ensure it’s aligned with your needs. There are a few tips you can follow to stay on track.

Schedule Monthly Financial Meetings

Set aside time each month to review the household budget and make adjustments as necessary. That way, both partners are aware of their current financial situation and can discuss any issues as they arise.

Review Financial Goals Quarterly

Ideally, you should be meeting with your partner on a quarterly basis to discuss your short-term and long-term financial goals. This makes it easier to evaluate your progress or reprioritize goals based on evolving circumstances.

Use a Shared App for Financial Wellness

Technology can be a lifesaver when managing joint finances. Rather than trying to track all your expenses the old-fashioned way, consider swapping that pen and paper for a financial app. Tools like You Need a Budget can help you track your spending and keep tabs on your finances on an ongoing basis. 

Financial Wellness Requires Teamwork

Merging finances adds a layer of complexity to money management, but it needn’t derail your goals. By maintaining an open line of communication and being flexible with your spending, you can achieve financial success as a couple. Whether you’re focused on short-term goals like buying a house or long-term goals like saving for retirement, there’s power in teamwork. It just requires some cooperation.

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