Money issues can both weaken and strengthen a partnership or marriage. Having an honest, non-judgmental and on-going dialogue about finances with your significant other will make it easier when difficulties arise and tough decisions need to be made.

Big Picture

To start a dialogue about money, try asking your significant other about a childhood memory related to money. Talk about how your experiences growing up have shaped your approaches to spending and saving and how comfortable you feel about talking about money. Be frank – being vulnerable strengthens your bond with your partner. Listen and try to understand your partner’s financial priorities, even if they differ from yours.

By setting financial goals together and agreeing on a path forward, you will both be vested in the process and progress.

Get More Specific

If you are contemplating marriage or combining households, consider sharing net worth statements (list of your assets and liabilities), credit reports and debt repayment obligations with your partner. Discuss the following topics with your significant other before merging resources:

• Lifestyle Choices – what are your priorities (i.e. having kids, where you want to live, how you value vacations and travel, your income goals, what your ideal retirement looks like) and how will it affect your collective finances?
• Family and Career Goals – kids are wonderful, but expensive. Do you want to have children? Will you both work while raising children, or will one of you stay home? Are you in careers that offer part time work opportunities that balance family and work life? If the need arose, would you support a parent? Or sibling? Before making these decisions, understand the impact on your income, expenses and savings.
• Expenses – how to split expenses (i.e. 50/50, proportionally) and how to pay expenses (i.e. whether to use a joint account, who pays the bills).
• Savings – whether to open a joint account, how much to contribute and the use of the funds (i.e. saving for a home, vacations); how much to set aside in a rainy day fund; and how to contribute to retirement accounts.
• Debt – how debt was created – spending habits and financial priorities – and strategies for debt repayment and future debt avoidance.
• Budget – spending priorities and limits (i.e. $ threshold for purchases made without consulting your partner) and savings targets.
• Insurance – combining coverage when beneficial (i.e. health and auto) and evaluating life and disability coverage options.
• Wills – how to distribute property on death and health care directives.

Protect Yourself

When you merge finances with your significant other, consider keeping a credit card in your own name (so you can build your own credit history) and maintaining six months of living expenses in an individual account. In addition, you might want to keep pre-merger savings and investments in separate accounts. The aforementioned actions might afford you some level of financial security if the unimaginable occurs.

Talk Money Regularly

While these initial discussions will set the stage for how you deal with financial issues in the future, it is equally important that these discussions continue on a regular basis. Consider setting a monthly time and place for you and your partner to have “money talks” – it takes the pressure away from one person having to initiate a discussion. Each party should speak freely without fear of any repercussions. Consider documenting your discussion so that you can both be accountable for your actions and try to focus on each other’s strengths when dividing up responsibilities.

Be flexible, as your financial goals and priorities may change over time. Having regular open dialogues with your significant other will ensure that any changes feel less abrupt and will help you problem solve more effectively together when financial difficulties arise.