Is Your Relationship Ready for Shared Finances? 5 Questions to Ask Yourselves

Money is the number one cause of couple conflicts, and it is no small step to start sharing financial obligations with a significant other. Whether discussing a first joint credit card, signing a rental lease together, or buying a home together, the ramifications can be serious and long-lasting. Here are a few questions to ask yourselves before making the leap into joint finances.

1. Are we really ready? There are some benefits to joint finances, including a heightened sense of commitment and partnership, tax advantages, reduced housing expenses by consolidating under one rental lease, and more openness about money. By entangling your finances, however, you’re creating a far more difficult situation to extricate yourself from, if the relationship goes south.

2. Do you know everything about your partner’s financial history? Maybe he has a bankruptcy in his past, or maybe she has a drawer full of maxed-out credit cards that you don’t know about. While it’s about the least romantic activity imaginable, you should sit down and go over your credit reports with one another, and get a sense of where you each stand. If one of you is has a checkered past, you may want to slow down the financial side of your partnership, while you work on mending your credit and proving to one another that you’ll make a responsible financial partner.

3. What are your financial plans and goals? Like the above, it sure isn’t sexy, but you need to talk about your financial goals with one another. Maybe one of you is gung-ho about retirement savings and the other hasn’t even thought about it, or maybe one of you is thinking about quitting your job and taking out a home equity loan on the house in order to fund a business start-up. It could even be as simple as one of you having a job that may require relocation, which would make a one year rental lease problematic. Before both of you go on the line for common bills, make sure you’re both on the same page.

4. Who’s responsible for which bills, and what will be paid jointly? Some bills may be paid jointly (e.g. the rental lease), while others may be paid individually (e.g. filling up the gas tank in your respective vehicles), while still others may be covered by one person only (e.g. he agrees to pay for food, she agrees to pay for utilities). Sit down, negotiate, argue, discuss, and eventually agree on what constitutes each partner’s financial obligations and who’s going to pay for what.

5. Are the day to day details under control? Who’s going to physically write the checks to pay the bills? When? How will electronic transfers be set up? Don’t let the details slip through the cracks, and realize a months late when the eviction notice arrives that no one bothered to pay the rental lease.

While sitting down and talking about money with your partner isn’t fun or romantic, it’s incredibly important as a foundation of your relationship. Shared finances can ruin an otherwise strong relationship, so do the hard work up front, so that it doesn’t come back to undermine and destroy your relationship down the road.

Shared finances is one of the biggest issues that couples face, from joint credit cards to shared rental lease agreements to shared mortgages. Here are five questions to ask yourselves before joining your finances.

Brian Davis is a finance and real estate writer and contributor to Nuwire Investor, WannaNetwork, REIClub, and EZ Landlord Forms, an online provider of free rental application and rental lease agreement forms.

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