Learning to manage money together builds trust and helps diffuse future financial conflicts, according to the website of the Certified Financial Planner Board Standards, Inc. (CFP Board), a nonprofit organization dedicated to supporting professional standards in personal financial planning.
The CFP Board offers these tips for couples to make the most of their money:
– Talk first, then plan. If you haven’t talked about finances before getting married or moving in with a partner, it is never too late. Start with an honest discussion of each other’s assets and debts (if any.) Next, create shared financial goals, whether they include saving for a house, paying off student debt or starting a business.
– Manage together. Benefits of a shared bank account include equal access to money and easier long-term planning. But even if your accounts are separate, create a budget together with plans for covering monthly and other expenses.
– Update leases and beneficiaries. Not all couples choose to legally share a home, but having both names on home-ownership documents can make future refinancing easier. Also, creating or changing an existing will to update beneficiaries ensures that your partner will have access to your assets if something happens to you, and vice versa. This includes not only wills, but also IRAs, 401(k) plans and insurance policies.
– Think long term. Discuss an emergency fund with your partner, and start one if you haven’t. An emergency fund available to both partners can be used to manage expenses such as sudden unemployment, illness or a major home repair. But make sure both partners contribute to retirement accounts, through employer 401(K)s or other accounts.
– Think short term. Try a weekly money date to review finances and progress towards goals. If issues arise and the conversation gets tense, step back and revisit the issues when you cool off. Remember, the more often you talk about money with your partner, the easier the conversations will be, and making trust and honesty a priority in financial planning will pay off in your fiscal and personal relationship.
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