How to Merge (your finances)
So, you're in love! Congratulations! You have found your person you want to be with for the rest of your life. You've started wedding planning and have been "pinteresting" your dream life. The house, the car, the kids, and the great jobs. The one thing you're still scratching your head about is "how do we get here?"
Next comes the dreaded "personal finance" chat. Will you merge your finances? Won't you? Does your fiance have debt? If so, are you okay being responsible for half of that? There are so many uncomfortable financial questions that should be addressed before you get married. However, the beautiful thing is that not one type of financial situation is right for every couple. Here are five steps to start deciding if merging your finances is right for both of you:
1. Where do you stand?
First things first, where do you stand as an individual? You need to have your finances figured out before you tackle your net worth as a couple. To find out where you stand, I recommend using personal capital. Personal capital is an app that aggregates your information from your bank, retirement accounts, credit cards, and any other financial type of account you may have. From there, it shows you areas you can improve if necessary. It also may be the first time you honestly take a look at your net worth. You may be surprised what you find out from your financial situation! Combining your life in marriage is fantastic, but you are still an individual with hopes and dreams of your own that you may need some financing for. Can you make those things happen with your funds?
2. Talk about your concerns
Ask that your partner also to do step one. You both should do step one separately so that you can come up with your thoughts regarding each’s financial situation. Once you both do step one, set up a dedicated time to meet and discuss each person’s financial situation. Note: you may want a glass of wine for this! After everything has been laid out, be honest about your concerns within your financial situation as well as your partners. The hardest step of the process can be this meeting. You may not want to offend your partner, but you need to discuss your dreams and concerns considering their financial situation will now be yours if you decide to merge. You may find out that you are a spender where your partner is a saver. Is this going to be possible to combine your financial situation if you think differently about money? As you can see, there is a lot to discuss.
3. Evaluate if you need help
Once you've spoken about your concerns, evaluate if you need help from a third party. Are your financials far off or are you on the same track? Does one partner have beliefs about money that you do not hold? Do you foresee this as being an issue? Speaking to a professional can help you establish healthy guidelines for your life as well as goals that you can set together. Seeking help before you are married can save your marriage. The number one reason for divorce is money. Make sure that you make getting on the same page regarding your finances is just as important as wedding planning.
4. Set up meetings together
If you need help, establish meetings together. Don't allow your partner to dominate the situation or cop out completely. You both need to be present when dealing with your finances. If down the road you both have decided that one person will handle the majority of your funds that is fine too. However, in the beginning, it is crucial that you both understand what is going on. You may learn that doing your finances isn't as difficult as you thought and you enjoy the process of building wealth with your partner. It is also an activity that will establish trust and mutual understanding as a couple.
5. Make a decision
Merging your life doesn't necessarily mean every couple needs to combine their finances. Sometimes I urge clients not to. The most critical step is that you decide on how you will be proceeding. Once a decision has been made you will feel a significant burden lifted. You finally have a plan in place, and you can go back to your Pinterest board!