QUESTION: At what point should someone consider discussing their finances in detail with a significant other?

ANSWER: Talking about finances can be one of the hardest things to bring up in a relationship, but if the relationship is a serious one, earlier the better. You want to know what obligations and debts the other person may have and how they are managing them. You want to know how they think and feel about managing money. Is it in line with how you think and feel? If all is well, then great. If not, work together and have open and honest discussions about how to manage finances. You may want to or need to take steps to protect your own assets and credit depending on your significant other’s situation.

Q: What are key topics couples should discuss before merging their finances?

A: Before you merge your finances, talk about your financial goals and dreams. Consider putting together a plan that prioritizes each goal and factors in the ideal time frame for achieving each goal. As part of this discussion, talk about your spending habits, your approach to saving and how you will resolve disagreements about money. Be upfront about any issues you might have had with money in the past and how that might affect your lives going forward. Putting it all on the table at the outset can help avoid problems related to money matters in the future.

Q: What are some suggestions on how couples can divide their income?

A: One of the biggest decisions you should agree on is how much of your income will be directed to individual accounts or to a joint account. Individuals who are used to managing their money may want to maintain their account or have a separate account for discretionary spending. If this is your preference, have a plan for who is responsible for each expense. Opening a joint account that both parties contribute to is a common way to pay for shared expenses, such as rent or mortgage payments, utilities, food. If you decide only to have a joint account, discuss how you’ll handle discretionary spending. Many couples agree to discuss any purchase made above an agreed-upon amount, so both partners feel involved in the decision.

Q: Should couples always have a joint account?

A: Not necessarily, but setting up an emergency fund is something to consider. An important consideration for any couple is having a sufficient cash reserve in place to meet emergency needs or to provide funding if special opportunities arise. A general rule of thumb is to have six to nine months of income set aside in a cash account that is easily accessible when the money is needed. If both individuals earn income, both should contribute to this joint household account. Clearly communicate what type of expenses warrant dipping into this fund in order to avoid a potentially stressful situation.

Q: What advice do you have for someone whose soon-to-be spouse has existing debt?

A: If one or both of you is bringing debt to the relationship, such as student loans or credit card debt, it is important to agree how those will be paid off. Will both of you contribute to loan payments, or will the person who brought those debts to the relationship take sole responsibility? Reducing and eventually eliminating these debts should be a priority for the long-term financial stability of the household.

Q: How can you protect yourself from their spouse’s existing debt?

A: Do not add your name to spouse’s existing debt or take on new debt with the spouse.

Q: What other advice do you have for couples who decide to merge their finances?

A: The key is to talk to each other and being involved, whether it is about existing debt or taking on a new debt, i.e., buying a home together. Consider putting together a plan and working on the goals and dreams together. If it seems like an overwhelming task, there are professionals that can help.