Joint Finances - Is Your Relationship Ready?

The decision to share finances is as huge as the decision to become cohabitational in a relationship. This can be a deal breaker or a partnership maker depending on how it goes. Here’s some tips on how to make the decision together, and how to make that decision work for you.

One of the first things you need to do is figure out how you both are inclined to view the bills. There are a few different ways new couples view joint finances.

One way is the “Then & Now” way. The “Then” bills would be the ones you’ve each arrived with: your student loans, your car payment, your credit card bills. Charities you’ve chosen to support. Your insurances and investments, your obligations and any other loans or debts. The “Now” obligations would be the ones you currently have together: Rent. Utilities. Food.

Another way to view your bills is what I call the “Agree & Disagree” way. The “Agreed” bills and obligations would be things you both feel are worthwhile. He may feel her student loans were a good investment into their futures together, and agrees that this is a valid bill and doesn’t mind sharing in the payment of it. However, he may feel her $25,000 in credit card debt is not an investment, it isn’t a worthwhile bill, and may not want to help pay it off.

This one isn’t as cut and dry as the previous way. Even the current food bill may incur disagreements. She may not want to pay half of a food bill that includes a lot of junk food, red meat, and snacks, since she eats nothing but Jenny Craig and salad anyway. He may not agree with the utility bill because he’s constantly turning the heat down, and she’s forever turning it up. She may resent how much they've spent on flatscreens or electronics, and the premium monthly cable package.

That’s going to involve a real conversation. Make a list of all the bills, and all the income, and sit down together over a pot of coffee and honestly discuss this. Look at each bill and honestly say how you both feel about paying it. It might surprise you to find out you have a problem paying for some and not others.

After this conversation, you should be able to figure out whether you’re looking at the bills from a “Then & Now” or a “Agree & Disagree” way. She may be one, he may be the other As long as you understand the motivations behind the feelings, this shouldn’t be a problem.

This exercise is to learn and understand your thought processes. Going forward from here, you need to try to work together to understand how to balance them out.

The income that you are both bringing into the situation will be a huge factor in proceeding from here. Look at the bills you each have resentment toward paying, and look at your incomes.

If you resent having to pay her credit card bill which may be for example $300 a month, yet she earns $600 a month more than you do, you can pretty much see that her extra income covers this bill, so in essence you have nothing to worry about.

In most cases though, this won’t be quite as easy and simple as the above example. There will more than likely be a whole list of factors, pluses and minuses.

Agreeing to pool all your money and resources, and debts and obligations, means you are agreeing that you’re equals in incoming and outgoing monies and contributions.

For many couples, that is where the problem occurs. They don't understand or appreciate the total value each brings to the table. There are many factors. Before anything becomes an issue, discuss them.

Here is a very rough example of what I mean:

Let’s say, she’s an accountant, and he’s a car salesman. Her office is in the house. He commutes to work. Since she doesn’t commute, she has more time than he does to invest into housework.

When they look over their bills and their income, they need to consider that they each have a low car payment because of his work discount. They don’t have to pay a year end tax accountant to do their taxes because of her expertise. They have to consider that she puts more time into the cooking, cleaning, laundry, bill paying, and other household commitments. It's not enough to just say she earns more than he does. There is so much involved. Even outside of the day to day part of the finances. Maybe his family gave them the down payment on their apartment. Her family is constantly asking her to send $50 towards somebody's bail. He spends more on hobbies. Etc etc.

Everyone has assets and liabilities.

As long as you can both really consider the whole picture - all the things you both contribute financially to the relationship - and as long as you both believe that overall, it's fair and even, you're good to go.

It's when you do not feel it's fair that you'll crash and burn. If one of you feels the other is not doing their fair share, you're heading for disaster.

Does this sound too businesslike for you? Would you prefer not to compare all these details?

I’m all for that. My husband and I didn’t nickel and dime everything when we made the decision to live together and join our finances. We were in love and committed to our future. It didn’t matter who did more housework, or who earned more. It didn’t matter who came into the relationship with debt. It didn’t matter who drove what or did what, or had what.

But not everybody feels that way. In today's world you'd be safe not to assume this is all going to be OK. It's better not to have surprises. If you're serious about spending your lives together, make sure you take the time to know each other. That includes knowing how much debt you each have, how much money you both have, and how you each feel about the other's spending habits. It's much better to give your mate the chance to react to how much debt you have or how much you spend at the track every week, before you marry. And you should want to know what you're getting into as well. When you marry, you're forming a contract. You should know if on your wedding day you've become responsible with him for his back child support, or the $40,000 he still owes on his boat, or a lein that placed against his house years ago.

Like anything else, this really comes down to communication. If you can discuss openly and honestly the way you both feel about money/bills/debts and expenses, you have a good chance of at least understanding where the other one is coming from, and at least compromising.

Verbalizing that you have an issue with this bill or that debt may be enough. Maybe one of you just needed to express their feelings on it. Sometimes acknowledgement is all you need.

I’ll give personal examples here. His family is huge, and mine is tiny. Christmas/birthday/baby gifts for his side are just out of control. I don’t feel good about spending so much on them. But guess what. It’s his family. There is no getting around that. I get to express that once in a while, and that’s the end of it.

On the other hand, while my husband is extremely charitable, he is not quite the sucker that I am. I tend to give to the charities that I support a bit more than we can afford sometimes. He will look at the checkbook and say, “You gave $ XXX dollars to the Humane Society?” I explain how I gave extra this month because of the dogs rescued from a shelter that closed… or whatever happens to be going on. And he always says, he can’t be upset at me for something I do with my heart. It’s part of why he loves me. Maybe he thinks of it as “my” family. He knows we spend serious bucks on his family. So maybe my over-charitable expenditures balance out for him in the big picture.

Conversing about how you both feel about money and each other's spending and earning may reveal things that surprise you.

I’ll give another personal example. I spend money on beauty. Don’t get me wrong, we can afford it. But it is probably more than some women spend. I get my hair done, I get manicures and pedicures. I buy good skin & hair care products, and cosmetics, and update them often. We do alot of winter activities like snowmobiling, so I want to make sure my skin survives.

Many men would look at the $$$ and say, “Are you out of your mind??” But in my relationship, my husband LOVES that I do my hair and make up and enjoy feeling girlie and pretty. He does not see these expenses as a burden to our budget at all. He sees this as “gifts I give him every day.” – Yup, that’s a direct quote. I come home from the salon and he doesn’t ask how much. He says, “Thank you for spending your afternoon being beautiful for me.”

Obviously, this is a specific example, and not for everyone. I'm just saying you may be surprised. You may go into the conversation about finances with your girlfriend thinking - she is going to hate that I drop a couple bills every month at my poker game. Meanwhile, it turns out she LOVES having that night to herself, to take a bubble bath, eat ice cream and watch a chick flick. So to her that money is totally worth it.

Communication is the key. Express your feelings on what expenses you don’t feel OK about, and really listen to your partner's feelings as well. Try to get to the motivation behind these feelings. Don't assume this conversation means you're going to be judged or forced to cut out things that matter to you. The goal is learning how each other thinks and feels.

And not everything can be compromised. Agreeing to disagree about some things is fair, honest and workable. He doesn’t like that she spends so much on unhealthy food and shoes. She doesn’t like that he spends so much on luxury items like porn, or car accessories. But as long as you both realize that somehow in the larger scheme of “who–does-what, who-makes-what, who-spends-what,” it basically all balances out, then there shouldn’t be any resentment.

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*All text is original content by Veronica. All photos are original content by Veornica, OR used with permission. All videos are courtesy of Youtube.com.