When a couple takes “the next step” in their relationship, that often means combining their resources. At that transitional moment, one of the first concerns that arises is how the couple will manage their joint finances.

Money is a thorny issue for many couples. However, those who take direct, practical, and objective approaches to their combined budgets are likely to succeed in balancing their budgets and meeting financial goals. Here’s a rough framework for doing so.

Communicate Openly

Miscommunication — or total lack of communication — is the downfall of many relationships. Money is one of the top subjects American couples fight about. Before working together to manage your finances, agree to make transparency and honesty your first rule.

Start with a mutual promise to reserve all judgment. Talk about spending patterns, personal debt, and financial goals as individuals. Examine your joint assets and liabilities, your individual spending habits, and how you plan to deal with unforeseen expenses or unexpected windfalls. No financial subject should be off-limits.

Know the Numbers

More than half of Americans feel insecure about their financial status, according to a study by Northwestern Mutual. That lack of stability sometimes leads to a mortal fear of looking at personal finances. But you can ignore the facts for only so long before inactivity makes your money even shakier.

Both you and your partner should be fully aware of each other’s outstanding debt, expected income, and overall financial status. This will make it easier to align your financial priorities and strategize your budget.

Set Goals Together

After you’ve taken stock of your joint financial situation, map out your personal and mutual financial goals, both short- and long-term. Common goals include paying down debt, saving for healthcare, making a down payment on a home or a car, traveling, and planning for retirement.

Couples should prioritize the most necessary milestones and expenses. But there’s also room to discuss more “pie in the sky” goals, like an overseas vacation or starting a business. By collaborating to take care of everyday necessities, you may find strategies for reaching more fantastical goals.

Start an Emergency Fund

Almost all financial advisors recommend setting up a fund to cover six to twelve months’ worth of living expenses in case of emergencies. Critical situations to account for include potential job loss, home or car repairs, appliance replacement, or any emergency affecting you and your family.

Just like your other financial goals, set a target for your joint emergency fund. Make your contributions to the fund non-negotiable until you reach your target — but don’t stop contributions once you do.

Look Into Life Insurance

The loss of a partner through death or disability can be emotionally devastating. While it might seem crass to think about the loss of their income, the resultant financial crisis can be just as catastrophic.

That’s why many experts advise taking out life insurance: to protect your partner and family from financial disaster in the ultimate worst-case scenario. Payouts will help restore financial sustainability, possibly repaying outstanding debts and giving you and your family a fresh start.

Get Help

Finally, don’t resist asking for help when you need it. Professional financial advisors and counselors help couples of all kinds find solid footing as they work toward fiscal independence. If you and your partner are at an impasse — or are just uncertain about your financial strategy — help is just a consultation away.

Sources:

https://today.yougov.com/society/articles/42707-how-and-why-do-american-couples-argue

https://www.thinkadvisor.com/2023/08/18/only-57-of-americans-feel-confident-about-their-finances-survey/

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