Match?  How to know when it's time to combine your finances

Match? How to know when it’s time to combine your finances

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Money may not be the most important thing if you’re in love, but it’s worth serious consideration if you want a long-term relationship.

A partnership that pools resources and shares expenses can be a very good thing for a relationship and for the financial well-being of others. However, different spending and saving habits can also be a long-lasting source of conflict for couples.

From a household finance management standpoint, sharing a joint bank account can make things a lot easier.

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“Money stresses people out,” said Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth in New York. “In general, the fewer pieces that move, the better.

“If you’re paying bills and depositing checks to and from an account, it’s easy to see what’s going in and what’s going out.”

That, in turn, forms a good basis for writing a common budget and setting financial goals together. It also gives both partners a good view of each other’s spending and saving patterns, and can potentially highlight issues that need to be resolved.

Boneparth suggests that it’s better to learn about a partner’s spending habits, debt obligations, and overall financial situation sooner rather than later.

“Ideally, you want to develop everything before you get married,” he said. “These things can create fractures in relationships.

“It’s about trust and honesty,” Boneparth added. “You need to address problems, find solutions and support each other on these things.”

What to keep separate and when

A joint bank account is one thing, but mixing investment assets, sharing real estate titles and other property is another. While individuals can and should designate beneficiaries for investment accounts and other assets, it doesn’t always make sense to pool assets and accounts with a partner.

In fact, there can be a wide range of personal, financial, and tax-related reasons why mixing assets or keeping them separate is the best approach for a couple.

“There’s no one solution that’s right for everyone; it’s a matter of individual preference,” Boneparth said. “There may be good reasons to keep some separate accounts and divide assets and liabilities in different ways.”

The universal solvent for many of these problems is simply strong communication.

Douglas Bonepart

bona fide wealth president

For example, a person may have business interests, property, or an inheritance that they want to keep separate from a relationship. In some cases, it could be to ensure that one spouse is not exposed to the potential liability that the other partner has as a business owner or professional. In other cases, it may simply be the personal choice of one or both partners to manage their finances separately.

The context of merging or keeping separate assets is often considered under the guise of a prenuptial agreement prior to a legal marriage. The parents of one of the spouses, for example, may be concerned about protecting the assets they plan to inherit to their engaged child.

This process can, of course, be a source of friction and pain between a couple, but it is essential to address these issues early on and resolve any emotional issues.

The only way to make sure spending, saving, earning, and inheriting money don’t become an issue of conflict in a relationship is to put it all out on the table and discuss it.

“The universal solvent for a lot of these problems is just strong communication,” said Boneparth, who is also married. “That’s what makes a good relationship in general and a good financial partnership specifically.”

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