Love and Money: 5 Ways Couples Can Work Together on Finances

It may not be the most romantic topic, but how you manage your money together is the beating heart of a solid relationship.

And it’s common to clash with your partner over money. Of married or cohabitating couples polled, 70% said that they had gotten into a disagreement with their partner over finances in the last year, according to a survey from the Association of International Certified Public Accountants (AICPA). Those disputes mostly centered around needs versus wants (36%), spending priorities (28%), and making purchases without first discussing them (22%). 

This Valentine’s Day, you might want to reflect on how you and your partner can better handle your money. You might want to wait until after you get dessert to bring it up, but here are five ways you can improve your financial life, together: 

1. Communicate

For any couple looking to work together on their finances, the starting point is good communication. Talking about money, and the way people handle it, is crucial to developing better financial habits with your partner, especially if you hope to build a life with each other. And yet, people don’t always like to talk about money. A little more than half of married or cohabiting couples claim that they feel “very comfortable” talking to their partner about finances. 

To start the conversation, you might consider asking your partner these questions, if you don’t already know the answer: 

• How much money do you make?
• How much debt do you have? And what kind (student loans, credit cards, etc.)?
• Are you comfortable having credit card debt? Do you tend to carry a balance or pay off your bill in full?
• What is your ideal strategy for dealing with money as a couple?

Once you have that initial conversation, you may find it easier to dig into more of the details.

2. Decide whether you want to merge finances

As you start to build a life with your partner, or inch closer to that possibility, you’ll want to consider whether or not you want to merge your money, and how you want to do it. Combining your finances often becomes a central issue once you get engaged or married. You’ll have to decide on a few different items: whether or not to combine bank accounts, whether or not to get joint credit cards, and whether to file your taxes separately or jointly. 

All of these decisions come with pros and cons. “There are benefits and drawbacks to filing jointly or separately,” says Julian Schubach, a Wealth Manager at ODI Financial, based in Rockaway, New Jersey. She recommends working with a certified public accountant (CPA) to talk through best practices for filing as a couple.  Remember, filing your taxes jointly can affect your tax bracket, so you’ll want to make sure you do your research before you file.

3. Collaborate on a budget

Whether you’re single or in a relationship, it’s critical to make a budget and do your best to stick to it. If you are cohabiting or married, you probably want to sit down with your partner to hash out your budget together. There are few different budget templates you might follow, including the 50-30-20 budget, the envelope method, and the zero-sum budget. 

When creating your budget, you’ll want to discuss how much you’re comfortable spending each month, what your priorities are when it comes to saving, and how you want to pay off debt if you have it. You may also want to divvy up your responsibilities, such as keeping track of expenses and paying off bills. “I manage a spreadsheet of all our incomings and outgoings and to budget every month,” says lifestyle and money blogger Victoria Sully, based in Cornwall, England. “This is a shared document with my husband and I update it regularly, always keeping him in the loop to try and make decisions together.” 

4. Talk about debt

Talking about debt and paying it off is a big part of most people’s financial life. The average household debt in the U.S., including credit cards, mortgages, home equity lines of credit, auto loans, and student loans, was $155,622 as of September 2021. As you and your partner budget together, you should determine how you both feel about debt, how much debt you have, and what your plan is for paying it off, separately or together. 

Communicating about debt is critical especially as you combine your financial lives. You don’t want to hide a credit card spending problem from your partner, and you don’t want them to keep a significant amount of student debt from you. One study finds that couples who openly discuss debt may have greater relationship satisfaction and commitment to staying together. 

5. Decide on goals

Another thing that’s likely to come up while you budget is what your goals for the future are. You probably want to make sure you and your partner are aligned when it comes to having kids, buying property, traveling, and where you want to live and work, or if you can work remotely. All of these goals require planning and saving. Together, you can compromise on a list of your goals, and sketch out a savings plan to achieve those objectives. 

Take this time to also think about when you want to retire, and how much money you want to have saved when you do retire. Keep in mind that when you file your taxes jointly, the amounts you can contribute to your retirement accounts change as well. For 2022, you can each contribute up to $20,500 to an employee-sponsored 401(k). People aged 50 and over can make additional catch-up contributions of $6,500.

Marriage can change how much money you can contribute annually to a Roth individual retirement account (IRA). Contributions begin to phase out when you earn more than $129,000 as a single tax filer or when you earn more than $204,000 as a married couple. When you earn $144,000 or more as a single tax filer, you can no longer contribute to a Roth. The same holds true for married couples, who can no longer contribute if their joint income is $214,000 or more.

Within your Stash account, you can set up different Goals such as buying a house, having kids, and retiring, and you can add money to those goals. You can also start investing with a brokerage account and saving for retirement with an IRA.