Talking About Money Can Help Couples Live Happily Ever After

 According to a 2014 Wells Fargo study, only about half (54 percent) Americans feel it’s important to know their significant other’s credit score before comingling finances.  Yet, financial experts would say that discussing how to handle joint finances is one of the best ways lovebirds can set themselves up for happily ever after.
Combining accounts
Many couples already have their own accounts so when considering comingling finances, the question is whether to combine everything into joint accounts or keep them separate. Having separate accounts lets each individual feel independent, knowing that he or she can tap his or her finances whenever the need arises. On the other hand, joining accounts helps unite the couple’s goals and can help create a more effective investment program. One solution to consider: keep separate accounts and have a joint account that both individuals contribute to for covering household expenses.
Budgeting
Some say that the key to financial success is to spend what you have after saving, rather than saving what’s left after spending. Many couples find themselves in the latter position because they lack a budget to control their expenses, often leaving them with nothing to save. It’s usually better for a couple to sit down and list their monthly income and expenses. Then it becomes a matter of determining how they will control expenses so they can set money aside to help achieve their goals. For example, a couple may want to purchase a home within a few years. If so, they can create a “fund” that they contribute to so they can accumulate a sizable down payment, which will help reduce the size of their mortgage and, in turn, their monthly payments.
Joint credit
While couples are not required to apply for credit jointly and may apply separately as an individual or with people other than a spouse or domestic partner, having good credit is still an important first step towards developing a sound financial future. Good credit can help when applying for a mortgage or car loan, and in some cases, a job. For example, a common misconception about credit is that when you get married, your partner’s credit score may lower yours. While this is not true, it is important to note that what it might affect is your ability to access credit if you are seeking joint credit.
Buying a home together
You may always apply for loan as an individual, but couples looking to buy a home together will find that most lenders look at the credit history of both applicants and consider the average of your two credit scores when approving a loan. This is also true if you are looking to purchase a car together. If your or your partner has a low credit score, not only can it affect the loan amount and the interest rate, but it can also prevent you from obtaining the loan.
Financial goals
Maintaining good credit is important as you prepare for different life events – including when you’re considering combining finances with your significant other. Wells Fargo offers these five important tips to keep in mind when thinking about money and your relationship:
1. Discuss your financial situation, including your credit score: be honest about your credit history. When discussing how to finance an item such as a car or a mortgage, always discuss how you will repay the loan with your partner.
2. Plan a realistic budget together: calculate your income, expenses, and savings for future plans as well as retirement plans.
3. Set financial ground rules: track how much you’re spending as a couple and set parameters to help you save and plan for emergencies.
4. Share your financial goals: create a realistic financial plan together to help you reach your goals.
5. Maintain an open and ongoing dialogue: your credit score can change rapidly, and even missing a single payment can influence it. Be sure to inform your partner of any changes with your credit, if it might also affect them.
Talking about money and credit can feel awkward but when starting a life together, it’s important to have awareness and understanding of each other’s financial situation.
For more information, please visit www.wellsfargo.com.