Diary of a CFP® Pro: February — Ten Ways for New Partners to Seamlessly Plan Together

This month’s insight from Marguerita Cheng, CFP® Pro: Couples traditionally merge their finances and many other aspects of their lives. Although joint finances can be seen as symbolic of a strong partnership, many couples alternatively choose to keep their finances separate. Deciding how to manage bank accounts and expenses should be a top priority for newlyweds and couples in long-term relationships. 

Reality check: Learning how to manage money together can be a rewarding way to bond with your partner. The following ten tips will help new partners more seamlessly plan together.

  1. Initiate a discussion about money: It’s best to talk about finances before you and your partner marry or move in together. If you’re already sharing a living space with your partner, discuss the topic as soon as possible. Be honest and disclose your assets and liabilities – in other words, how much you own and if you owe anything.
  2. Consider a shared bank account: There are several benefits to sharing a bank account, such as allowing each partner equal access to money when they need it. Additionally, shared financial goals are often easier to accomplish when combining bank accounts. However, joint bank accounts don’t work for every relationship. While older generations commonly shared their finances, a report from Bank of America found that millennial couples are more likely to keep their finances separate.
  3. Create shared financial goals: One great way for new partners to plan together more seamlessly is to discuss long-term financial goals. Whether you want to pay off debt, commit to a budget, or become an entrepreneur, your dreams will guide your everyday financial decisions. It’s best if both partners are on the same page with shared financial goals, so neither partner is unpleasantly surprised by the other’s financial decisions.
  4. Share your home: If you’re renting or buying your home, consider the legal aspects of sharing your home with your partner. Discuss adding each other to rent or lease agreements. Refinancing a mortgage is more complex but adding your partner’s name to the mortgage now can prevent inconvenience in the future.
  5. Create a budget together: Making a budget is another great way for new partners to plan together seamlessly. A shared budget can stop arguments about money before they even begin. How you track your spending as a couple is another critical decision. To simplify budgeting, you could stick to a cash envelope system – setting aside specific amounts of cash to use toward different expenses – or use software programs like Tiller or Mint.
  6. Build an emergency fund: An emergency fund is essential for your financial toolbox. If you don’t already have one, it should be your top priority to build one. An emergency fund brings financial security into your relationship. With an emergency fund, you’ll have money available to manage unexpected expenses, such as if you or your partner suddenly become unemployed or if you need a significant home repair.
  7. Contribute to your retirement account: Saving for retirement is crucial whether you’re married, single, or in a long-term relationship. A retirement account can provide financial stability when your working years are over. Most employers offer a 401(k) plan, and you should take advantage of matching contributions if your company provides them.
  8. Schedule a weekly money date: The more often you talk about money with your partner, the easier the conversations will become. Check in on your finances and track progress toward your goals during a weekly money date. If the conversation becomes heated, it’s okay to take a break and revisit the discussion later.
  9. Update your beneficiaries: Updating your beneficiaries on investment accounts, savings accounts, 401(k) plans, IRAs, and insurance policies is an excellent way for new partners to plan together seamlessly. Along with creating or changing an existing will, updating your beneficiaries can ensure your partner gets access to your critical financial assets if something should happen to you.
  10. Trust your partner: Honesty and trust are the foundation blocks of any strong relationship. Trust your new partner to handle money unless you have evidence that your partner isn’t telling the truth. Combining bank accounts can help you build trust with your partner. If you haven’t already, begin a conversation with your partner about money to plan together more seamlessly and achieve your shared financial goals.

The bottom line: If you haven’t already, begin a conversation with your partner about money to plan together more seamlessly and achieve your shared financial goals.

Photo by Peter Miller, flickr.com creative commons

Stay tuned for next month’s installment of Diary of a CFP® Pro!

About Marguerita M. Cheng: Rita is the founder and Chief Executive Officer of Blue Ocean Global Wealth.  She has also been a spokesperson for the AARP Financial Freedom Campaign and a regular columnist for Investopedia & Kiplinger. Previously, she was a Financial Advisor at Ameriprise Financial and an analyst and editor at Towa Securities in Tokyo, Japan.

Certifications: CFP® professional, Chartered Retirement Planning CounselorSM, Retirement Income Certified Professional®, and a Certified Divorce Financial Analyst. As a Certified Financial Planner Board of Standards (CFP Board) Ambassador, Marguerita helps educate the public, policymakers, and media about the benefits of competent, ethical financial planning. She serves as a Women’s Initiative (WIN) Advocate and subject matter expert for CFP Board, contributing to the development of examination questions for the CFP® Certification Examination.

Awards: Ameriprise Financial Presidential Award for Quality of Advice and the prestigious Japanese Monbukagakusho Scholarship. In 2017, she was named the #3 Most Influential Financial Advisor in the Investopedia Top 100, a Woman to Watch by InvestmentNews, and a Top 100 Minority Business Enterprise (MBE®) by the Capital Region Minority Supplier Development Council (CRMSDC).

Rita volunteers for several organizations: CFP Board Disciplinary and Ethics Commission (DEC) hearings, she has also served on the Financial Planning Association (FPA) National Board of Directors from 2013-2015 and is a past president of the Financial Planning Association of the National Capital Area (FPA NCA).

Click here to learn more about Blue Ocean Global Wealth and click here to email Marguerita today!

Blue Ocean Global Wealth headquarters:

9841 Washingtonian Blvd., #200
Gaithersburg, MD 20878
301.502.5306 / 888.731.3117 (fax)