How to Merge (your finances)
So, you're in love! Congratulations! You have found your person you want to spend the rest of your life with. 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 "finance" chat. Will you merge? Won't you? Does your fiance have debt you don't know about? Run for the hills! The beautiful thing is that not one type of financial situation is right for every couple. Here are 5 steps to start deciding if merging your finances is right for you.
1. Where do you stand?
First things first, where do you stand as an individual? I recommend using personal capital to see your net worth. Personal capital aggregates your information from your online bank, retirement, and loan logins. From there, it shows you areas you can improve if necessary. Combining your life in marriage is fantastic but you are still an individual with hopes and dreams of your own. Can you make those things happen with your own funds?
2. Talk about your concerns
Ask that your partner to also do step 1. After everything has been laid out, be honest about your concerns within your own financial situation as well as your partners. This can be the hardest step of the process. You may not want to offend your partner but this is an essential step in knowing what you may be taking on as a couple (yes, their debt is now your debt too). You may find out that you are a spender where your partner is a saver. How do you mesh the two?
3. Evaluate if you need help
Once you've spoken about your concerns, evaluate if this is something that a third party needs to take a look into. 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 together as well as goals that you can set together.
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 the finances that is fine too. However, at the beginning it is crucial that you both understand what is going on. You may learn that doing your finances isn't actually as difficult as you thought and you enjoy the process of building wealth with your partner.
5. Make a decision
Merging your life doesn't necessarily mean every couple needs to merge their finances. In fact, sometimes I urge clients not to. The most important step is that you simply make a decision on how you will be proceeding. Once this is done you will feel a significant burden lifted. You finally have a plan in place and you can go back to your pinterest board!