You may find it difficult to manage finances together when
you've been acustom to managing your finances alone. But when
you become part of a couple, many things change, and your
finances are no exception! Some couples take the traditional
path of blending all their money together, however today more
and more couples are deciding to keep their finances separate.
What are the benefits of each way? The benefits of combining
funds into one checking account includes easier record keeping,
simplified money management (you hope), and less paperwork when
applying for credit. In addition, the blending of finances can
create a "unified front" in that aspect of a relationship that
simply can't be argued with. Obviously, the drawbacks are that
both people are actively using the account and that will make it
harder to track all the transactions and keep up with your
balance when you don't know what the other is doing.
If you choose to maintain separate accounts, this will allow
each person more freedom, because they won't have to run
purchases by the other person. In addition, doing so may create
fewer complications in the relationship, allow each person to
build their own good credit, and quite simply allow them to
maintain a sense of independence. The most obvious downfall to a
his and her finance arrangement is that it can be
disproportionately unfair. If one person makes $80,000 per year,
and the other $35,000, the person making the lower salary may
not like the arrangement!
If you do decide to keep "his and her" checking or savings
accounts, then you'll need to find a system for paying bills and
handling other joint finances together. One option that has
worked great for many couples is to create a third checking
account and designate it as the "combo" fund. You can set up
your separate, individual checking accounts to have money
automatically withdrawn from them each month at most financial
institutions. You will have to sit down together and decide what
amount needs to be in the joint account every month in order to
cover the "combined" expenses. In a situation like the
above--where one person makes significantly more than the
other--it is usual for the higher wage earner to pay a larger
portion of the expenses.
Another aspect to consider with his and her finances is credit.
This can be considerably good or bad, depending on your
individual credit ratings. However, at some point you may want
to apply for joint credit with your spouse. You will most likely
want to make big purchases together throughout the marriage such
as a car, a house, or appliances, and it's much easier to do
that if you have joint credit. With joint credit, you will both
be 100% responsible for the debt, even if you co-sign a loan
with your spouse or add your name to your spouse's credit card
account. On the other hand, if you decide to maintain separate
credit, the general rule is that you are not responsible for
each other's debt. (The exception to this is if the debt is
considered a house hold expense.)
If one person had bad credit prior to getting married, then the
person with good credit may want to keep their credit separate.
Why? Because if you apply for credit together, the lower credit
score will bring down the higher one.
The best advice? Be upfront about your financial weaknesses, and
discuss a plan--before the big day--to handle them. Once you
have identified the potential pitfalls, it will only take a
small amount of planning to overcome them.
About the author:
If you would like to get more credit information you can visit
our website which contains many credit resources.
http://www.my-credit-report.info This article is copyright
2005, but can be freely reprinted, as long as no changes are
made, including hyperlinks.
Written by: Dave Robinson
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