So, you’re in love! You’ve even updated your profile to “In a Relationship.” No more attending your friend’s wedding solo or being the only single one at family events. The benefits of having that special someone are countless, and one of those benefits should be financial stability.
Whether you have a steady live-in partner, a fiancé or a spouse, your finances should be a topic of daily conversations — not daily arguments. If you’re new to living with two incomes, you’re probably surprised by how nice it is. Two heads are better than one, they say, and so are two salaries. But how do you merge those salaries effortlessly? Here are a few strategies to keep your pennies pinched and your minds at ease.
The “CFO” Approach
In this approach, one person would be designated as the Chief Financial Officer of the relationship. Just like any successful business, a successful relationship needs an appointed financial advisor. This strategy is great for those “opposites attract” couples, in which one person is a penny-pincher and the other an impulsive spender. It would be wise to allow the penny-pincher of the relationship to be the CFO and take charge of monitoring statements, establishing a budget, paying bills and distributing their other half a reasonable allowance each month — reasonable being the key word to success.
The “Yours and Mine” Approach
This financial strategy works great for couples who have separate career lives and enjoy separate checking accounts. Especially for couples living together without a legally binding relationship, keeping separate finances could be beneficial later if your relationship were ever to end; benefits include less paperwork to cancel joint accounts, avoiding financial disputes and protection from a vengeful ex. Even married couples or couples in civil unions might prefer separate accounts. This allows each person to maintain their financial independence and keep track of where their money goes.
For couples that choose to keep their funds separate, make sure to talk about who is responsible for what bills or how expenses will be shared. It’s also a good idea to establish an agreement or goal for savings and spending, so nobody gets out of control and affects the other’s finances.
The “Rotating Finance Advisor” Approach
This strategy is my personal favorite and the method my husband and I use to handle our finances. In this model, each person is allowed to be in charge of finances on a rotating basis. How you rotate is up to you: try each month, each yearly quarter or even every year. This rotation allows both people to be responsible for bill-paying, budget-setting, savings goals and spending amounts, but at different times. It would be wise to compare how each person’s approach is different, and how it affects your wallet. When my husband is in charge, for example, we tend to save more money. When I am in charge, we have a lot more fun.
The “Couldn’t Be Bothered” Approach
This approach to handling finances is great for those couples with a certain amount of disposable income and who are both fairly poor at budgeting. It’s an easy approach: Hire a financial advisor. If your partner and you have the means but not the interest, it might be wise to hire some help. This is also a good option if it’s time to look at investment ideas and retirement plans.
Of course, these are only a few ideas for merging two incomes. Each couple should create their own strategy that works best for them. No matter what your approach is, remember communication is vital, and sticking to an agreed budget is necessary for success. Most importantly, be open about your finances to protect your relationship and your financial future.