When you come across that special someone and you begin to consider making them a permanent part of your life, you will eventually come up on the problem of managing your finances as a couple. This is sometime very hard to do after you have spent quite some time managing your finance on your own. Now there is someone else that will have some say so about how to handle the financial end of things is run. Many couples use the traditional method of combining their finances together, however more couples have decided to keep the finances separate.
There will be advantages to each system, the benefits of combining the funds into one bank account include easier money management, less record keeping, and a reduced amount of paperwork when applying for loans. The consolidating of the finances will also show a more united front in the aspect of the relationship that cannot be questioned. Drawbacks include that there will be two people using the account which make it a little harder to balance the check book and monitor transactions, so make sure that there is a certain amount of communication about the financial part of your relationship.
If you value your freedom then keeping separate bank accounts may be the option that will be best for you, this method allows spending without consulting the other person and also will make for fewer questions about money. This may also reduce the complications in the relationship, by maintaining a sense of independence, and allow each to build their own good credit profile. From time to time this option may not be the best idea due to the chance that it may be unfair to the person with the higher salary by making the finance agreement a little one sided. If one person makes $60,000 and the other only $45,000 then the lower paid person will be at a disadvantage.
Once it is decided to keep a his and hers checking or savings account the it will be time to come up with a process for paying the bills, along with addressing other joint financial situations together. You can open up another joint checking account that is for the monthly household obligations, it can be set up where money from each of the personal accounts is automatically deposited into the joint checking account for this purpose. There will need to be some discussion about how much money will be needed each month to take care of the combined expenses, most of the time the person with the higher income will shoulder more of the monthly expenses.
An additional benefit or problem with a his and hers financial arrangement is credit, depending on the individual credit ratings it could be a good thing or not. If you reach the point where you are interested in applying for joint credit with your spouse, maybe you need to finance a mortgage, purchase a new automobile, or remodel the kitchen. This process will be made much easier if you apply for these types of loans and have joint credit. Joint credit will make it to where you are both responsible for making the payments, it will also be viewed in a positive manner by your future creditors. Keep in mind that if you decide to keep your separate credit profiles then it is usually commonplace to not be responsible for each others debt. Family expenses are the exception to this rule, this is still considered joint debt.
Keeping separate credit profiles is good for situations where one person had bad credit prior to the marriage and the other person had good credit. This is good to know about, because if you apply for a line of credit together the lower credit score will lower the combined scores in the eyes of the lender.
Always be forthcoming with your financial situation and come up with a plan to handle the finances before the big day arrives. Once you have found out where the weakness, problems to avoid, and pitfalls are located you will be in much better position to overcome them.
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