If you are considering co-habiting or marriage (or even marriage to a future King), there's probably a lot on your mind. Sitting down to discuss money issues may not be at the top of your list, but it's one of the most important tasks to tackle if you're starting a life with someone.
These days, couples are inundated with cautionary tales and divorce statistics warning of financial disputes--not exactly what you want to hear. It's true that money matters are complicated and have long been one of the top reasons why couples fight and split up. But discussing issues up front and getting your finances in order from the outset can help keep money from putting a damper on your relationship.
Tackling your finances as a couple starts with assessing your situation. Do you two share the same financial attitudes, habits, and goals? Day-to-day questions such as whether you will share accounts, who will pay the bills, and how you will budget money together are important to discuss, but a candid conversation is the essential starting point.
Start the Dialogue
Regularly discussing your financial goals and current standing is a good habit to start now, if you haven't already. What shared and unshared goals do you have? What type of lifestyle do you want? Do either of you have student loans or outstanding credit card debt? How do you each feel about it? Get any financial anxieties out in the open sooner rather than later.
Discuss upcoming financial plans, such as whether you will buy a house or if one of you is considering returning to education. Do you expect any major financial changes?
Ideally, these conversations should begin before you pick up the keys to your new apartment or tie the knot. But if you've already taken this step, there's no better time to start the conversation than now.
Take Inventory
Once the two of you are on the same page, the next step is to map out your combined earnings, assets, and debts. Include your income, investments, credit card debt, and student loans. Also include any mortgages, car loans, and any other amounts you own or owe. Make a master list of each of your current, savings, and investment accounts so you both know where everything is.
Listing all of your assets and liabilities together will highlight any problem areas and help you see the big picture. Do you have two cars when you could get by with one? Do you have more combined debt than you realised? Once you know what you're dealing with, you can discuss how you will approach and prioritise complex issues--such as paying off credit cards or investing for retirement--together.
Compare Your Employer Benefits
If one of you pays into a company pension plan but the other is self-employed, it could be a good idea to look into personal pension plans or consider both paying into the one corporate plan. Similarly, if one or both of you receives subsidised private healthcare from your employer, you should check that you're not duplicating your benefits, i.e. most company healthcare plans offer cover for spouses or families, as well as the individual employee, so there's no need for you to both have separate plans. Private healthcare providers are pretty contemporary in their attitudes these days and just require that you are co-habiting, rather than married, to officially count as a couple in their eyes, but do check.
If you are both benefitting from private healthcare policies, or similar services, ask yourselves if it makes sense to keep separate coverage, or if one of your plans is better. Look at each policy's premiums, coverage, deductibles, and doctors covered to see if there is a clear winner. Also compare your vision and dental plans and life and disability insurance policies, if these apply. Check with your employer(s) about rates to add coverage for your partner.
Check Up on Other Insurance Needs
Co-habiting couples can frequently save money by streamlining insurance policies. Change your car insurance and building and contents insurance so that you are both on the same policy. You may also receive a discount for using the same provider for multiple types of insurance. Also check in with your insurance broker about insuring personal articles, such as your valuable jewellery or his prized vinyl collection, which may not be covered under your previous insurance policy.
More important than precisely outlining your combined net worth and optimising your insurance policies, however, is making sure you understand each other's financial attitudes and goals. Openly discussing your combined financial situation together from the outset will enable you to deal with the array of financial tasks and challenges you will inevitably face in your lives together as a team.
A version of this article was first published March 2010.
