Being in a relationship can be absolutely wonderful. Knowing someone is still attracted to you no matter how stupid your hair may look or how bad your morning breath may smell is just the best thing in the world.
All kidding aside, one of the most overlooked parts of a relationship is the financial aspect.
When love is in the air who the hell wants to talk about budgeting and emergency funds? Yeah, no one but that doesn’t make it any less important.
The following is a list of 9 simple and pretty straightforward Do’s and Don’ts of relationship finance. Mastering these will not only make you and your significant other a power couple when it comes to your finances, but it also may help strengthen your relationship down the road.
1. DO an overall break down of BOTH of your overall financial situations
Even if you’re the half with the spotless financial record, your partner’s financial baggage could come back to bite you both in the butt.
Take stock in not only the assets and debts you have but what your partner and you have combined. This will ensure that there are no unwelcomed surprises down the road.
2. DO separately categorize what each of you own (your assets)
When evaluating BOTH you and your partner’s finances it’s best practice to keep tabs on what you own separately.
This pertains to retirement accounts, individually owned bank accounts, investment accounts, animals and pretty much any other type of personal belonging you can think of.
Just in case the worst were to happen, aka a breakup or divorce, you are able to distinguish what was yours and what was your partners prior to coming together.
I realize that your relationship is all roses and perfection but let’s be realistic, not all relationships last forever so it’d be best to know what you each individually owned beforehand… just in case.
3. DO keep separated checking accounts (specifically for individual expenses)
Individuality is important and just because you’re in a relationship doesn’t mean you have to share bank accounts.
Maintaining separate accounts has its advantages. It’s much easier for you and your partner to track what each of you spends.
Saw that new 4k TV for the living room that you were dying to get, went out on a completely reckless shopping spree last weekend or went down to the local casino without your other half knowing?
It’s much easier to track these sort of individual expenditures when maintaining your own separate bank accounts. Plus fights over where the hell all the money out of your joint checking account is going every month tend to diminish when separate checking accounts are maintained.
That being said, it’s incredibly beneficial to have a shared banking account if it’s for the appropriate expenses.
4. DO have a joint bank account (specifically for shared expenses)
I would recommend looking into opening a joint bank account for shared expenses. This joint account typically lowers bank fees and is easier for recordkeeping’s sake but please be careful here.
Ensure that the two of you are constantly communicating every time a check is made out or a Venmo is paid to keep track of the money coming in and out of the account at all times.
5. DON’T Combine debt
Combining credit cards and other debt may not necessarily be the best call here. If only one of you were to have a bad credit score, it will adversely affect the rating the other. Aka, if the boat is sinking on one end, the entire ship will probably go down.
Also remember that if you and your partner decide to open a joint credit card it is the BOTH of you who will ultimately be responsible for the decisions your other half makes when it comes to that debt.
6. DO create a budget
List all income and expenses (both monthly and annually) and add together the total of what both you and your partner make in a given month.
Next, look at bank account statements, your checkbook or whatever personal finance App you may be using and add up all of the expenses you uncover.
Subtract your expenses from your joint income and let’s cross our fingers that you get a positive number. If not, looks like we’ll need to reevaluate our spending habits to better reflect what we earn.
7. DO save an emergency fund
Sh@! happens. It’s a known fact that some unforeseen emergency will come up. Your car bites the big one or your stupid dog ate the chocolates you left out and now has to get his stomach pumped at the vet.
Whatever the case may be, having an emergency fund ready to deal with life’s curveballs is essential.
8. DON’T overlook insurance
Contingency plans, contingency plans, contingency plans. Always hope for the best but plan for the worst.
What will you do if the main breadwinner in your relationship were to get in a serious car accident, become disabled and thus leaving a huge income gap for the other spouse to try to figure out?
What if a spouse were to suddenly pass away leaving the other spouse to take on the sole responsibility of both your financial liabilities?
Life insurance and disability insurance are important here ladies and gentleman. Is either one of them fun to talk about, not at all. Is either one of them important, you bet your ass they are.
Life insurance can provide financial security for your partner if you were to suddenly die and half the household’s income were to suddenly go away.
Disability insurance may provide financial security for the household if a partner were to seriously injured/ill and not work for a prolonged period of time.
9. DON’T overlook estate planning
Estate planning is one of the most important yet most often overlooked aspects of couples finance.
Making sure what you own is going to where you want it to go if you were to suddenly pass away is one of the most important actions you can take today for your significant other.
Review beneficiaries to make sure your and your spouse’s money goes to where you want it to go should your unforeseen “biting of the big one” occur. Let’s cross our fingers that won’t happen anytime soon.
Estate Plan to ensure money goes where you want it to go and proper relatives take care of children (or pets)if there happen to be children (or pets) around.
Any opinions are those of Jacob Dahlstrum and not necessarily those of Raymond James.