Cohabitation is so hot right now. Marriage, not so much. Millennials are marrying later and less than previous generations.
The changing trends in marriage also mean different ways couples manage money. For many, it’s no longer a matter of completely combining finances and calling it a day. Instead, a lot of couples struggle to strike a balance between independence and collaboration. To help you find your happy medium, here are some approaches to try.
Use a Joint Account for Shared Expenses
A common financial strategy for cohabiting couples is to open a joint account for shared expenses like rent and utilities. Each month, both partners contribute a set amount to the account.
If you’re going to give it a try, just make sure to discuss how much you will each contribute. For some, equal contributions makes sense. For others, like when one partner significantly outearns the other, each person might contribute a percentage of their income, instead of the same total amount.
This approach can be a good way to start working as a team on money without diving headfirst into completely merged finances. Just remember to discuss the ground rules for the account in the beginning. Do student loan payments come out of the joint account? How about gas for your commute?
Make Money Talk a Habit
Whether you’re on the road to marriage or in the cohabitation game for the long haul, you should get into the habit of talking about money with your partner. Your relationship will thank you. Studies show that couples are happier when they talk about money more.
If you’re having trouble getting started, try discussing a few near-term financial goals. It could be taking a trip to Japan, dining out at a fancy restaurant, or paying off a big chunk of your student loans. Whatever it is, starting with something fun and tangible like goals is an easy way to open the money dialogue. Then, before you know it, you’re talking about how to accomplish your goals and voilà, you’re knee deep in financial talk.
Know Your Legal Sitch
Before you make big decisions about money, it’s good to understand which assets and liabilities are yours individually and which are shared.
If you aren’t married or in a same-sex domestic partnership or civil union, it’s usually easy to figure out who owns an asset or owes a debt. If both of your names are on the account, card, or contract, it’s probably a shared asset or debt. If not, it’s probably one person’s asset or debt. (For married couples, it’s a trickier question).
Keep in mind that sharing expenses is not sharing ownership. In other words, if your boyfriend’s name is on the car title but you pay for gas and maintenance, you probably won’t have a legal claim to the car if you break up.
Use the Honeyfi App
Here at Honeyfi, we’ve built a free app that makes it easy to manage money as a couple, whether your finances are completely combined or totally separate. #ShamelessPlug
To get started, just link your bank accounts and credit cards to the app, choose what to share with your partner, and then see your household finances — organized and categorized — in one place. Based on your previous spending, we suggest a shared budget and identify trends. You can track your spending against your budget, comment on transactions, and message your partner.
Any other ideas for collaborating with your partner on money? We’d love to hear from you.