• Reader Question: Merging Finances?

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    Reader D writes to us with this question:

    Here’s my question, and I apologize if it’s long. My boyfriend and I have recently made the decision to move in together and this, of course, requires a certain amount of financial meshing. I was wondering if you have any advice or any readers’ stories about how couples have managed this kind of quasi-joint situation. We have a shared household budget, but the rest of what I make is mine and the rest of what he makes is his. On one hand, we want to plan for the financial future together, but on the other hand, we’ve not reached the point where we are ready to share all our money. We have no plans yet to get engaged or married, although that is the hope for many years down the road. How do we plan for a future together, work towards joint goals, and maintain a trusting relationship while we’re in this I-love-you-but-I’m-not-ready-to-give-you-access-to-all-my-money period?

    If there’s anything we do know about finances, we do know the difficulties of the cohabitation without commitment. In fact, we ourselves lived in sin for a whole year before we were engaged. For what I’m going to write, I’m going to assume that engagement time may be a little more in the future than you’d like. Here’s how we made it work without jeopardizing our individual futures if the relationship turned sour.

    1. COVER YOUR ASS. And by that I mean sign a cohabitation agreement. Hey look, we even have a whole post dedicated to the subject. No, these aren’t romantic, but neither is morning breath. Her also has a great post on a book you may want to read: Shacking Up: The Smart Girl’s Guide to Living in Sin Without Getting Burned.

    2. KEEP ACCOUNTS SEPARATE. By the looks of it, you’re already doing that. For the joint household account, in the interest of fairness, I’d suggest that you each put in an amount of the household stuff that is proportional to your salary. For Her and I, it was easy since we made exactly the same salary when we first moved in together. Also, keep a firm list of what is “household” – and only allocate money to that account for items on that list. Keep your own money your own money.

    This also goes for savings accounts. You should each have one in your name. See #1. If things go sour, you’ll need to have some money saved to get your ass out in one financially okay piece. Agree to save a proportional amount of savings, with the intention that in the future that will all become both of your monies.

    Anyway, how is he going to save for an expensive nice engagement ring without you knowing?

    3. START SMALL. You’re timid about sharing your financial life together, and you have everything separate. But you have to start somewhere, right? For that, I’d recommend that you take baby steps. Open up a joint savings account. Agree to a smallish amount that you’d like to save together – for example maybe $50 a month from each of you. As time goes on and your comfort level increases, increase the amount. You can also agree to dump some of your personal savings into that joint account. Just make sure that there is a consistent method to allocating these funds.

    4. DEVELOP A PLAN. You want to plan a future together? Work towards mutual goals? That’s great! Now you need a plan. A great book that will help you get started is Smart Couples Finish Rich: 9 Steps to Creating a Rich Future for You and Your Partner. Write down your values. Write down your goals. Prioritize them and spend and save accordingly. Check out our value based plan for a start.

    I hope that what I’ve written helps with your fledgling cohabitation. It may not have the feminine touch that Her graces her posts with, but I think it’s good enough, right? (Remember, we are not responsible for the actions that you take as a result of anything said on this blog. Please don’t sue if it doesn’t work out.)


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