It's time to have “the talk” with your partner. The money talk, that is.
Those habits follow us into adulthood and into our own relationships. In our 20s, we are really starting to learn how to manage our own money and spending, but once we're in a relationship, the question arises: Should we open a joint bank account?
For some, it may be an easy decision. But for others, when money is a taboo subject and the future is unclear, the answer doesn't come as easily.
If this is something you're considering, ask yourself these nine questions before you get a joint bank account with your partner:
1. Have you seen each other's bank statements?
No matter how much you love each other, money is a touchy subject for many people. No one wants to feel judged for how they spend their money, and there might be some purchases your partner doesn't want you to know about (and vice versa).
Before you consider opening a joint bank account with your partner, the two of you need to sit down and bare it all -- all of your bank statements, that is. While you may not know exactly how much you spend on lattes or video games each month, your bank account certainly will.
It's important to understand each other's spending habits before sharing money so you know exactly what you're getting in to.
2. Will the bank account be for shared expenses or for all expenses?
Sharing money is a huge deal. The lack of financial compatibility is one of the top 10 most common reasons couples get divorced.
Some couples combine their money into one big pot with a “what's mine is yours, what's yours is mine” mentality. Other couples keep their own separate accounts, and open a shared account for shared expenses. Others do a combination of the two.
Make sure you have a clear list of what the joint account covers and what it does not. For example, your joint account might cover a vacation you take together, but not expenses for your girls' trip.
While there is no right or wrong way, you need to set clear rules and expectations from the beginning.
3. What are your spending rules? What their spending rules?
These are tough questions to ask each other, but it's critical you know the answers before opening a joint bank account with your partner.
Ask each other what counts as an emergency expense? How much money do each of you get as “free spending, no questions asked” each month?
Furthermore, how will you handle when one of you goes over budget? Do you need to check in with each other before spending over a certain amount of money?
Again, clear rules and expectations will be your saving grace when differences arise.
4. Have you made a budget together? Do you know all of each other's debts?
By the time you have some sort of income, you should already have a budget for yourself. Does your partner have a budget too?
If not, you need to help them create one and let them track their spending for at least six months before you consider opening a joint bank account with them.
If they already have a budget, the two of you need to work together to combine those budgets into a joint budget. Create a budget for at least one year ahead of time, combining your financial goals, debt repayments, savings milestones and new expenses you will incur over the course of the year.
Another (massive) thing to take into consideration is debt. How much of each other's debt is going to be the other partner's responsibility? A person's debt amount, type of debt and repayment plan need to be laid out on the table.
How will you feel if you contribute to paying off your partner's debt if you break up six months from now?
5. What percentage of your income are you each contributing?
In many relationships, income between two partners is not equal. Are you going to each contribute to your joint account based on a percentage of your income, or will it be a fixed amount?
If you are the partner making more money, you might begin to feel entitled to your partner's money. If you are the partner making more money, you might begin to resent your partner for contributing less.
Money is tightly tied to our emotions, which means sharing money brings a whole new aspect to otherwise happy, healthy relationships. If you start having feelings of entitlement or resentment, that's something you need to talk about as soon as possible.
6. Will you have separate savings account?
When it comes down to it, you should be looking out for yourself. Be prepared for the possibility that your relationship may not last for the long term.
Your savings account is not a back door out of your relationship, but rather a contingency plan. We can't predict the future, so saving for your own future expenses, retirement, plans is a good idea.
It's OK to tell your partner about this separate account; you may have goals they aren't interested in. Saving money for yourself is a way of keeping your individual identity in a relationship.
7. What happens if the relationship ends?
No one wants to think about their relationship ending, but it's something you need to be prepared for both as individuals and as a couple.
How will you divide what you share? Will it be based off who contributed what? Or will you just split the account right down the middle?
No one wants to think about the end of anything, whether it's a relationship or your life. However, just like having a will drawn up, it's important to have a plan in place so in the event of your relationship ending, the situation isn't drawn out and more painful by arguing over money and finances.
8. What are your long-term financial plans?
Do you and your partner have similar goals for then next five, 10, 20 years? Are you saving for a house? Are you trying to pay off your car loan?
If your financial goals and priorities are not aligned, you may be better off waiting to open a joint account until you come up with a plan together.
9. And finally, can I trust my partner?
It's one thing to trust a person with your heart, it's another to trust them with your money.
If you can't trust your partner completely, it may not be in your best interest to give them access to your money.
Talking about money may not be your favorite thing in the world. Raising these questions might make you uncomfortable, but that is a clear sign you need to ask them.
Opening a joint bank account with your partner is a personal decision between the two of you. If your answers to these questions aren't firm, you have a lot to talk about.