How to Handle Finances With a Partner
Money

How to Handle Finances With a Partner

by Sarah Landrum
Photos Joe Kathrina | March 12, 2015

IT'S HARD TO ENOUGH TO MANAGE YOUR OWN FINANCES, WITHOUT ADDING ANOTHER PERSON TO THE MIX. HERE'S HOW TO SUCCESSFULLY HANDLE FINANCES WITH YOUR PARTNER.

You know that loud, screeching sound a car makes before it comes to a full stop? That’s pretty much what I heard when I brought up the dreaded money topic with my fiancé…right after we moved in together. It was during the early stages of our wedding planning and I wanted to make sure our finances were in good shape.

Let’s just say there was a little disagreement on the subject. I thought he should be spending less on iTunes and he thought I should stop getting sushi with my girlfriends every Thursday. Neither of us wanted to budge.

The good news is, we didn’t have to. We’ve managed to keep our guilty pleasures without breaking the bank or starting any fights. I’ll be honest, it wasn’t a walk in the park. It took one very long conversation followed by several months of work to figure out a way to effectively handle our finances together.

This is what has worked for us:

WRITE DOWN GOALS

We didn't just talk about our goals. We wrote them down in a shared planner for accountability's sake, making sure they followed the S.M.A.R.T. criteria: Specific, Measurable, Attainable, Realistic and Timely. For example, we promised each other to save at least $500, between the two of us, at the end of every month.

HAVE A REASONABLE BUDGET

To meet our goals, we needed to have a budget. To create a budget, we needed to know exactly how much we spent per month. So we itemized our expenses—as individuals and as a couple—and noted the ones we could cut down on or do away with altogether.

(Cutting back on sushi was not an option!)

In our case, we realized we were spending a little too much on movies. Somehow, I managed to convince him to watch only a couple of movies per month, instead of the usual one per week. He did grumble a bit about missing out on the latest “Marvel” releases, but he eventually acknowledged it was for the best.

OPEN A JOINT BANK ACCOUNT

When all is said and done—and perhaps, when the “knot” is tied—there is no more your money and my money. We decided to bite the bullet and open a joint bank account before the big day. It was a touchy subject at first, but I was surprised by how easy it was for us to adjust.

Having your money in one account makes it much easier to handle your finances – and to see when the other is spending too much. Just be sure to take out cash for any big surprises to keep them a secret!

KEEP DEBTS DOWN

Let’s face it, planning a wedding and furnishing a home isn’t cheap. It’s easy to get carried away during the many (totally necessary!) trips to Home Goods or Best Buy, especially when you have those “convenient” store credit cards. To cut down on our spending, we said goodbye to those and a couple of our Visas.

We decided to keep one credit card each and to work together to make sure we don’t go over the limits or miss any dates. Not only has it helped us cut back on spending, but it has also cut down on the amount of checks that have to be sent out every month!

LOOK FOR SOURCES OF PASSIVE INCOME

Even after trimming our expenses based on the budget, it wasn't enough to save as much as we’d like. Our combined income was only a few hundred dollars above our combined expenses. Since we both had hectic schedules and neither of us could take on additional jobs, we brainstormed ways to make extra income without much effort.

We checked out a couple of options, but figured our best bet was dividend-yielding stocks. Sure, it's scary when their prices drop faster than a grand piano thrown from the top of the Empire State Building. However, when they go up...let's just say it makes you want to go outside and dance in the rain. And you literally don’t have to do any work!

Research a few passive income resources and find the one that works best for you!

SET ASIDE EXTRA CASH FOR EMERGENCIES

While sketching out a rough version of our budget, I noticed my beau staring at it without saying a word. When this went on for five minutes, I stopped and joked: "What, the budget's more attractive than me now?"

He chuckled. "Not at all. I think the budget would be more attractive if it had more room in it for emergencies, though. You know, hospital bills, malfunctioning appliances—that sort of thing." 

After a couple more minutes staring at the budget together, we decided to take our high school teacher’s advice to set aside 10% in an “Emergency Fund.” (Thanks, Mrs. Kelly!)

ORGANIZE FINANCE-RELATED FILES

Since anything financial involved a ton of paperwork, we wanted to make sure all of our related files were organized. We bought cabinets we could customize, because we couldn't find ready-made ones that fit our needs. Also, we used software like Mint and TurboTax to help us keep our digital files in order.

HAVE MONTHLY MEETINGS

After every month, we reviewed what we'd done so far over dinner. We tried to make it an honest, detailed discussion about how much we earned and how much we spent. We also talked about things like whether our goals were realistic or whether we were sacrificing quality of life for frugality. It helped us ensure that we were both held accountable for our finances.

REVISE PLANS AS NECESSARY

When goals turned out to be unrealistic or expenses couldn't be eliminated, we revised our action plan. We realized that, although building a money nest takes time, it shouldn't take too much effort. Once the fun of saving fades, we're more likely to stop doing it and splurge as we please. That’s the last thing either of us would want to happen.

KEEP EACH OTHER IN CHECK

Sometimes, I'd nudge him: "What did I tell you about buying movies?" Sometimes, he'd nudge me: "Uh-uh-uh, you're going over your credit limit, hon." We manage money as a team, and we're both the better for it. 

Luckily, I had a supportive, awesome fiancé who was willing to take the trial-and-error approach to figuring out the best way to handle our finances. Now that I've saved you the trouble of figuring out these tips for yourself, why don’t you give them a try?