You and your mate are living together. You believe you’ve found the perfect. You are loving and respectful of one another. You share many of the same likes and dislikes. You have similar goals, aspirations, and political views. The remaining topic yet to be discussed is money and that begs the question: as partners sharing a household, should you co-mingle your money as well as your hearts?
First off, you might want to get more familiar with the role money plays in your partner’s life if you aren’t already. Do you have an accurate snapshot of each others’ finances, net worth, assets and debts?
Does your compatibility as a couple extend into the financial realm, having mutual financial desires, goals, spending and saving habits? Or, have you slid blindly and naively into cohabitating without a clue of each other’s financial behavior, how money might affect your union, and how to exist financially as a team?
Are there money obligations from the past that could cut into your lifestyle as a couple now and perhaps continue into the future? Do either of you have a sizable loan debt, alimony or child support from a previous marriage, rising credit card balances compounded from accruing interest?
The Urge to Merge
When matters of the heart are concerned, responsible cohabitating couples like to start out on the right foot. Does the “right foot” include the belief that money is a part of what they should freely share with one another?
Money makes our world go round and money is wrapped up in trust, a testimony to your devotion and love for one another. Even the convenience of sharing money is also a part of the relationship covenant. Considering what’s mine is yours and vice versa is seen as an act of love, faith, devotion.
A Touchy Subject
For some, getting down to the nitty-gritty of money can be a touchy subject. You or your mate – or both of you – may feel uncomfortable discussing money because, well, your feelings about money and talking about it can be complicated.
As more couples decide to live together unmarried, there are more opportunities to get into trouble because their mindset is that love will conquer all. But that doesn’t mean that married couples necessarily deal with money issues any better simply because they‘re married.
Married couples can get into hot water over money just as easily. The difference may be that legally, the rules of property ownership may be more clearly defined in a legally binding relationship. Also, psychologically, you might feel more secure about co-mingling funds as a married couple.
And what do couples living together fight about most? Money is high on the list. Who’s spending what and why is usually what sparks arguments. When co-mingling decisions haven’t been made, arguments can intensify.
Ways to Co-Mingle Funds
The good news is that there are all sorts of ways couples can share financial resources. It’s a good idea to explore these with one another and decide which works best for your situation.
While co-mingling is usually thought of as putting both party’s income together into one account where it is considered the property of both, to be used as either or both see fit, there are options to the standard “split down the middle” approach.
Are you comfortable having joint bank accounts, credit cards, investment accounts? Do one or both of you already own a house and other real estate and property, from before you met? Should you add each others’ names to the ownership papers? You can make separate agreements about how to divvy up spending and planning your financial future.
What to Discuss
So you’ve agreed to have a money discussion. Congratulations! Where to start? How about:
· Possible consequences of co-mingling or not co-mingling. These will be different from couple to couple. Each relationship has a set of unique situations
· Discuss financial issues, your preferences, habits, debt. Examples: do you pay your bills on time? Do you wait until the last minute?
· If you do decide to co-mingle funds, deciding who will manage bookkeeping or assign financial tasks to each of you is even more important.
· Are there outside sources of income to disclose, such as getting outside financial support from family?
· If unmarried, know the laws in your state that affect cohabitation like “community property”
· Think about how you might individually protect certain assets in the event the relationship ends, such as a pre-cohabitation or prenuptial agreement.
Beliefs about Money
You each may have grown up with certain beliefs about money that have carried over … that money should be used for security, or that money should be used as a symbol of status. Air those beliefs.
What if each partner has very different financial styles: saving, spending, investing? One of you may be frugal with funds, the other may like to spend or possibly overspend.
One of you may feel resentful or jealous that the other partner has more discretionary income, a richer lifestyle, money with which they may choose to spend on something fun for themselves: a luxury car, expensive toys. How does co-mingling affect that discretionary income?
Financial hardship can cause extreme stress. What if you and your mate are low on funds, disagree on how money should be disbursed in paying bills? What if one of you overspends or uses money on habits like gambling, drinking, cigarettes? What if you don’t have enough money to get through the month?
The point is, married or unmarried, co-mingling or keeping your money separate, any unaddressed money issues have a way of creeping into a relationship and causing misunderstandings and conflicts … serious problems on both mental and practical levels. Bite the bullet. Be fearless. “Open the books” and discuss possible outcomes and solutions.