The “Yours is yours, and mine is mine” concept works best for those couples who do not want to be accountable to their partners and do not want their interference. It is apparently a good idea as it leaves no chance of disagreement between you. The fact is that it works well among live-in partners but not married couples.
There are circumstances like buying a house and a car, planning kids, saving for retirement, etc, when you will both have to club together. No doubt you will have to acquiesce to combining your finances for such a major financial decision because they do not fit in the personal finance category.
The process of combining your finances can be done blindfolded. It raises an alarm bell when you are connecting with debts as well. Suppose you jointly take out car finance in Ireland, your finances will be linked to your spouse.
If they have a bad credit rating or struggle to keep up with their share in instalments, you will see a damaging impact on your credit rating and future ability to borrow money. This move should be taken after deliberation. Here are the factors that you should consider before merging your finances:
You should have a complete picture of your own finances before merging them with your partner’s. Just clubbing together is not enough; its impact on your overall financial situation is another side of the coin you cannot overlook. You will need to track down your progress, have meaningful conversations and make strategies to be on the right track. Here are a few questions you should ask yourself before thinking of combining your money:
Unless you have a clear picture of your finances, you will not be able to make the right financial decisions with your partner.
Before you take the plunge, you should identify the prominent reason for combining your finances. It is likely that you do not need it for any specific reasons. Most of the time, the reasons include more significant financial decisions like a mortgage.
If you do not have to take out a mortgage or make any other major financial decisions, you might drop the idea of combining your finances. As far as you want to buy something like an expensive gadget, you can club together. The cost will be split between utility bills and common expenses, and you do not need to open a joint bank account.
The financial life varies by individual. The odds are your partner may not have as a sound financial situation as you have. Money conversations can be difficult between you when one of you feels hesitant to reveal financial information.
It is vital to take stock of each other’s finances once you have laid all your cards. Then, you need to decide if you are comfortable with combining your finances. Further, do you think it makes sense to do so, especially if you are looking to borrow money?
If you want to get a loan in Ireland jointly, you should examine the credit score and repaying capacity of your partner. Tying your finances to someone whose credit score is bad will influence a lender’s decision to lend you money down the line.
In the case of joint loans, when one of you fails to repay the instalment, the other will be completely responsible for the payment of the full instalment, and this will lower the credit points of both partners. Both of you should understand the pros and cons of combining your finances so you do not run the day down the track.
Being on the same page does not mean that you both should have the same kinds of goals. The plans you should draw must be compatible with the achievement of your goals.
How you and your spouse handle your money also plays a paramount role when it comes to deciding on combining your finances. You may be frugal, or your spouse may be spendthrift. When you both have a different money mindset, you may find it a bit more difficult to be on the same page. This can be a scary situation for you when merging your finances.
If that is the case, there are a lot of things to consider. For instance, how you both budget. You might budget each penny, or you can just simply check your weekly statement. When you are poles apart about money management, you should try to stress achieving financial goals together rather than emphasise the method you use. Understand and accept that everyone has a different way of handling money, and there is nothing wrong as long as you both can read from the same page.
What you have decided now is not set in stone. Your financial decisions keep changing, and so should your goals and strategies. In order to find the perfect balance between your roadmap and goals, you should accommodate your course of action to your current financial situation.
Keep tabs on your progress, fine-tune your strategies whenever necessary, talk to each other when things are not going the way you want, and find a solution together.
The decision of combining your finances with your partner cannot be taken in a rush. You should carefully analyse each other’s money mindset, spending habits, and goals. Do you think you are both comfortable with this idea?
Evaluate all upsides and downsides before making any decision. If you need counselling from a third person, contact your financial consultant. They can better guide you on whether or not it will work in your favour after evaluating your financial conditions, goals, and money-handling techniques.
