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Love.  Rear view of a multiracial couple holding hand. Photo by Adobe Stock Images.

A simple guide to combining finances in your relationship

Editor’s note: Rianka R. Dorsainvil, CFP® is the founder and president of Your Greatest Contribution (YGC), a virtual, fee-only comprehensive financial planning firm dedicated to serving entrepreneurs, first-generation wealth builders and thriving professionals in their late 20’s, 30’s and 40’s. Rianka also hosts 2050 TrailBlazers, a podcast aimed to address the lack of diversity in the financial planning profession by engaging industry experts and leaders in conversation.

Each of us has something I like to call our “money story.” We learn about money from the time we’re just a few years old all the way through our adult lives, and the experiences we have along the way — both good and bad — shape how we think about and what we do with our money.

So it’s no wonder that nearly half of all Americans in a serious relationship fight about money. When two people try to join their money stories together, things get a little bumpy. The key is figuring out how to communicate and compromise on how to manage your family finances.

Open up communication

Diving into your money stories and opening up lines of communication before you join your finances is paramount. Getting a feel for how you two each manage money individually, what your backgrounds are, and why you feel the way you do is important.

A recent situation a colleague shared with me is a prime example of why communication and honesty in financial discussions with your partner matters. My friend was meeting with a soon-to-be married couple, and one of them wanted to keep a separate account with only her name on it. Her fiancé was, understandably, a little bit put off by this opinion.

“Why would you need to hide money from me?” He wondered out loud, with my friend (their financial planner) in the room.

It took some exploration, but it eventually came out that this woman’s mother was left penniless when her husband walked out on her. Since then, she’d been very drawn to the idea of being financially independent of her spouse — even if she trusted him completely.

This was this woman’s money story. Whether she and her future spouse chose to work through it and completely combine their finances, or respect her wishes and open a separate account that only she had access to, was entirely up to them. But knowing why we look at money the way we do can help to ease tension and avoid judgment.

Spenders and savers

As I said, everyone approaches money differently, but, broadly speaking, there are two basic categories of people: spenders and savers.

If you are a spender and your significant other is a saver, financial tensions might come to the surface more quickly. Remember, your life experiences probably pushed you toward either the spender or saver category. Keeping that in mind, the next step is to lay out a game plan.

If you’re both savers

When both couples in a relationship are savers, you may experience built up bitterness as neither of you ever “splurge” on the things that make life worth living. Whether that’s vacations, fun events, or time spent together — you two should sit down and have a conversation about where these things fit into your budget, because they’re important!

If you’re both spenders

If both people in a relationship are natural spenders, they may experience a communication breakdown around who is spending on what when. When finances are shared, and you’re both spending at-will, it can be tough to stick to a budget, or move toward long-term financial goals like retirement savings or debt repayment.

A to-do list of shared finances

When combining finances with your significant other, I recommend tackling a few different “to-do’s” before you get your new joint accounts up and running:

1. Talk about your money stories and your values.
This conversation isn’t always going to be comfortable! Don’t be afraid to dig deeper with one another to get to the “why” behind how you manage money.

2. Set ground rules.
The only time people are upset is when they’re surprised. This is why it’s so important to set ground rules for spending. The #1 rule to set is how much each of you is allowed to spend without clearing it with your partner first. For some couples, they set a small spending limit to facilitate regular spending conversations. Other couples allow for more flexibility in personal spending but impose a limit to force a discussion about big purchases.

3. Figure out the logistics.
Personally, my husband and I have three checking accounts. We have one joint checking account, and we each have our own “allowance” account that has money deposited into it twice a month. Bills and shared expenses come out of our single joint checking account. But our individual accounts can be used for whatever we’d like.

4. Have a shared budget.
I love You Need a Budget for this purpose. You can set spending categories, financial goals (like saving and debt repayment), and track your progress together using the same software.

Dig deeper

I also think it’s important, especially when you’re about to make a big money move like joining finances with a significant other, to dig a little bit deeper into your unique money habits and stories. Sometimes, not everything we believe about money comes directly from our personal history. Systemic financial oppression, the racial wealth gap, and cultural financial attitudes all come into play when we think about how we view money.

I work with many people of color, women, LGBTQ+ individuals, and others from different minority groups. The unfortunate truth is that our money stories are often shaped by what society tells us we can and can’t do with money — and the opportunities we’re given as a result of our privilege or lack thereof.

My friend and colleague Brian Thompson, CFP®, has written about how the racial wealth gap impacts individuals. Systemic racism over time has resulted in practices such as redlining (or discriminating against people of color by “redlining” the neighborhoods they lived in), pushing non-white families into land contracts that were priced high and easy to lose. Today, the typical black family with a degree lags behind their white counterpart by more than $200,000 in accumulated wealth, largely as a result of discriminatory financial practices that were culturally accepted for the past several centuries.

It’s worth having a discussion about the racial wealth gap with your partner, or talking about your personal experience with systemic racism because it’s absolutely impacting how you manage and view your money.