For Valentine’s Day, couple your finances | Smart Change: Personal Finances
When Alli Williams married her husband in 2019, she knew she would marry with around $150,000 in student loan debt.
Now, a few years later, she and her husband are on the same financial page with their budgets and bank accounts, and they’ve paid off not just her student loans, but their credit cards and their truck as well. Williams had become debt-free individually when she was 25, and now, at 30, the couple are debt-free together.
“Paying off the debt isn’t the hardest part,” Williams says. “Managing your money is the hardest part.”
Williams, a South Carolina-based financial coach and owner of FinanciALLI Focused, says when she and her husband got engaged in 2018, it was the first time they had created a combined budget. They’re keeping expenses low and taking advantage of living in a low-cost area, and they’ve been strategic in using windfall earnings percentages to pay down debt and save. But the real key, she says? Frequent communication and checks regarding money.
Money can be a very personal and – at times – stressful part of a romantic partnership. debt management, Bank accounts, credit cards and bills are not only a logistical challenge, they are also a new source of potential conflict. If half of a couple likes to save money while the other person is a compulsive spender, that pair will likely need to have difficult conversations to avoid long-term resentment. For these conversations, there are professionals who can provide advice and information.
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Benefits of a financial advisor for couples
Similar to a therapist, a financial counselor or financial coach can create a safe space for couples to discuss issues and plan their future together.
Liz and Dan Carroll, an Oregon-based couple and owners of Mindful Money Coaches, have been married for 31 years. They use their personal money management success to provide practical advice to their clients, such as teaching them how to create long-term financial plans together.
“Everyone is a good candidate for at least one annual check-in with a financial coach,” Liz says. “And just like with the compound interest you get from investing, the earlier you start, the better.”
If you and your partner decide to work with a Certified Financial Advisor instead of a Financial Coach, be sure to choose one that functions as a fiduciary, which means they are forced to put your interests before profit. Non-fiduciary financial advisers earn commissions on the products they sell to their clients, so they might pressure clients to buy or invest in products that aren’t necessarily helpful.
What options do couples have for managing their money together?
There’s no one-size-fits-all solution to managing your finances, especially if you’re in a relationship. Some couples prefer to have all their money combined, others like to keep their finances completely separate, and some prefer a hybrid of the two. Regardless of the strategy, couples can use joint accounts manage shared expenses and save for special purposes.
However, the Carrolls do not recommend that married couples separate their finances. Even if one partner has debt or a low credit score, they advise both partners to take responsibility for overcoming financial obstacles as a team.
“Setting up creates global accountability,” says Liz.
“Couples always bring their own burdens and strengths into a marriage,” Dan adds. “So if you’re going into a partnership, you have to accept that you’re going to take the good with the bad.”
Pro tip: Create a budget just for “fun money”
Joint finances do not necessarily mean that you have to lose your autonomy. Williams and the Carrolls use a system in their relationships that they say creates a sense of independence while staying aligned with their finances: budgeting “play money” into individual accounts for each person.
“It’s like our ‘no questions asked’ money,” Williams said. “It’s money where we don’t have to check with each other before spending it, like my husband spending $10 at Chick-fil-A, or me spending money at Amazon or Target. We use Ally Bank’s buckets feature for our individual accounts, and we technically each have access to both, but we don’t need to verify it.”
The Carrolls use a similar approach for their play money.
“It’s always a budget item where everything goes into one bucket and then some goes into the fun expense accounts,” Dan explains. “We strongly recommend that each partner gets an equal amount and then they can do what they want with it. This creates freedom for both individuals.”
Money management and communication are core skills for any committed romantic partnership and, as Dan Carroll can attest, these skills spill over into other areas.
“It’s unanimous from the feedback we get from our clients that talking about money helps the whole relationship.”