There's enough stress associated with planning a wedding that most people don't even think about their finances. However, this is an important step towards your lives together, so it's imperative to have the conversation as soon as possible.
DO YOU HAVE TO COMBINE YOUR FINANCES?
This can be a difficult subject for any couple to talk about, regardless of how strong the relationship is. Talking about money, even with those closest to you, is still often considered taboo. However, before building a life with anyone, you need to sit down and have a conversation about expectations of how money will be handed and coming up with a budget.
In the past, the 'easy' answer has been to simply to combine finances and open joint accounts. However, trends have been slightly shifting as more women are bringing in their own income. According to Forbes, between 16% to 18% of couples now keep their finances completely separate.
While this may work for some people, there's the potential for issues down the line when you don't know where your partner's money is going. As a result of this, most people still find it's easiest to combine their money in some way. When this process should begin depends on the individual couple. While some may wait until after they say 'I do,' many couples find themselves with shared expenses long before walking down the aisle.
When it comes to bills, you have a few options to consider:
The main issue with this method is if one person makes substantially more than the other, it could cause issues down the line.
Say ‘Spouse A’ makes $8,000 a month while ‘Spouse B’ makes about $4,500. Their monthly expenses come to $4,000 a month, so both parties chip in $2,000. This leaves ‘Spouse A’ with $6,000 while ‘Spouse B’ is left with $2,500
If half the couple makes considerably more, it may be easier to split bills by percentage so that each side is paying an “equal” amount of their income.
Instead of adding all the bills together, you can split up each individual bill so each person is paying the agreed upon 'fair share.' For example, maybe one person will take care of the mortgage while the other will take care of the car payments. Then other bills will split as you see fit. The most important part here is to make sure both sides agree to avoid tension down the line.
A good way to handle your bills, regardless of how you split them, is to have a joint account that is specifically for that. Every paycheck, you will both contribute your share and then set up automatic payments using that account. That way, you don't even have to think about it and everything gets paid on time.
Just a reminder, before closing ANY accounts, make sure there are no automatic payments that you aren't aware of. This will prevent you from being late on payments and hurting your credit score.