This Valentine’s Day new romances will blossom, and others will deepen their commitment.
Just like it’s no longer assumed that couples will formally marry or have children, neither should fully joining finances be a forgone conclusion.
I know examples of couples raising children and not joining finances, so I’m reluctant to recommend anyone ‘should‘ join finances.
With money being the number one cause of relationship breakdown, I recommend couples tread slowly and carefully when joining finances. (Source: Relationships Australia, Relationship Indicators Survey, 2011.)
Yes, I know this is far from romantic, but neither is fighting about money. I believe everyone deserves joy, so I hope this helps you and others you care about to make informed decisions. I encourage you to share this article with them.
How aligned are your financial values?
Money funds our life choices, so when dreaming about your future together discuss how you plan to fund those dreams.
Like a meat-loving omnivore dating a vegan raw food enthusiast, it’s not impossible but if your values are vastly different it will take conscious effort to develop a system that works for both.
How similar are your money habits?
Where are each of you on the spectrum of Frugal to Frivolous?
How about on the spectrum of Planned to Impulsive?
Is there a substantial difference in income and/or net assets?
Whilst not a deal breaker I’ve seen this become a big issue, especially when there are also significant differences in values and habits.
It’s best to have explicit, conscious conversations about how your income and wealth are shared.
If you’re discussing living together be aware that a nasty break-up could see your former partner claim some of your hard-earned assets. It’s money well spent to consult a family law specialist for some education, so you make an informed decision.
When one or both of you have children from prior relationships, even adult children, carefully consider how joining finances will impact on the distribution of your money upon death.
Assuming your current partner will do the right thing by your children has been the cause of many expensive litigations.
As above, it’s money well spent to consult a specialist estate planning lawyer for advice, even if you think you’re not worth much.
(In fact, everyone should have properly drafted estate planning documents.)
Remember those traditional marriage vows of “I take you in sickness and in health?”
Somewhat clinical (okay, admittedly it’s all been clinical), before you join your finances ponder this scenario, “how committed am I to supporting my partner if they permanently lose their income due to illness or injury?”
That scenario is stressful enough without the added financial stress. To mitigate the financial risk, get professional insurance advice and make the premiums a priority part of your budget.
Phew! Having courageously peered inside those closets, time to celebrate!
After you celebrate, read the smart way to join finances for some examples that will help you discover each other’s money values and habits.