Setting Up Joint Accounts: Tips & Tricks
There are several issues that can create trouble for a couple's relationship. Financial matters usually take first place as money can quickly complicate the smallest of things. Whether it is reckless spending by one person, or a lack of financial strength by the other, monetary attributes tend to put blame on individuals. Some problems can be solved or avoided by joining accounts with your partner. However, if you don’t think things through or aren’t in a secure place within your relationship pay extra close to these four tips:
Cash in on Communication
The first step to take in coupling of finances is to sit down and talk. Explore your combined incomes, take note of each other’s strengths, and find solutions to any weaknesses. From there, you can map out a strategy that will not only keep your combined income on track, but also start accruing a savings to benefit your financial and personal future together.
Understand that compromise on spending and saving is going to be required at some point. Consider situations where one would prioritize saving for a college fund over saving money to purchase a home. These are personal scenarios that should be discussed within the relationship prior to considering joining accounts. You want to make sure the two of you are on the same page for future aspirations, plans, and goals so you know exactly where you want your money to be spent, or saved.
Pull Your Fair Share
In any relationship, transparency is key. The same applies to coupling your finances. Establish a joint account and determine an exact amount for how much each person is contributing. Decide on equal monetary amounts, or opt to put an equal percentage of your incomes into that account. This way the new account is an equal combination of your individual assets.
If one person in the couple makes a significantly higher amount than the other, perhaps go with option one to ensure each person is paying their fair share. At the end of the day, a joint account avoids financial secrets within the relationship. You don’t want one only spending while the other is only making.
Consider Emergency Expenditures
Most couples fail to plan for financial emergencies. Losses of a job or a significant illness are never expected but are the most detrimental to financial success. These issues are inevitable, and while people don’t want to think about the possibility of it happening, it is smart to plan for it anyway. Set aside some money to use in case of any emergency you run into. While a couple thousand dollars is a good starting point, recommendations are generally for a 3-month expense fund to be put aside for emergencies. This way your account won’t be wiped clean.
Meet in the Middle
Forbes notes that couples in different situations (engaged, cohabitating, married) need to adopt different approaches to combining their finances and merging their lifestyles to successfully navigate the coupling of money in their relationship.
Both individuals should adapt to a lifestyle that meets their finances in the middle. By doing this, over spending will be less likely to occur and no one will feel taken advantage of.
When it comes to combining your finances, the biggest factor to success is communication. Be open with your partner, understand where they are coming from on finances, and work to find solutions that both partners can live with now and in the future.
Financial planning isn’t always as easy as it sounds so if you need to seek professional advice please contact Indian River Financial Group.