Should you open a joint bank account? Get a credit card together? Cosign a mortgage? Money Girl Laura Adams covers ten crucial rules for first-time couples managing their money together.

18 minute read

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Hey friends. Thanks for joining me this week. My name is Laura Adams. I’m a personal finance and small business expert and author. I’ve been hosting the money girl podcast since 2008, and I’m thrilled that you’re here downloading this show and hope. Hopefully you will subscribe and continue getting the weekly shows. My miss here is to help you get the knowledge and motivation to prioritize your finances, build wealth and have more security and less stress. Every show will help you come away with some tips and advice to just make better money decisions and take your financial life to the next level. Be sure to subscribe to the show that way you’ll automatically know when each new show is released. They come out early every Wednesday and I’d love for you to participate. You can send me questions or comments, uh, the easiest ways to leave a message.

You can do that by calling 3 0 2 3 6 4 0 3 0 8, or you can email me using my [email protected] or connect with me on Instagram at Laura D. Adams. And every week we publish a companion blog post for the show. You’ll find that over in the money girl [email protected] today’s episode is number 706 called moving in together, 10 money rules for first time couples. This show was kind of inspired by some trends. Recently, I’ve been seeing a lot of unmarried people and, you know, partners and even friends going in to buy a home together. And a lot of cases because prices have gone up up so much that that’s the only way people are finding it to be affordable. And I thought, well, there are a lot of other rules I wanna cover for first time couples. So, um, we’re definitely gonna talk about real estate, but we’re gonna talk about some of the firsts.

You know, I think being a new couple just includes a lot of, uh, things that you do for the first time. It could managing money together or even becoming homeowners together. And you know, you’re gonna have to face things like, should you create a joint bank account or co-sign a mortgage together. These are all really critical life events that can either make or break your, your romantic relationship. Uh, and they’ve got a lot of, you know, obviously financial and legal consequences as well. So in this podcast, I’m gonna cover 10 money rules that every first time, couple should follow. All right, let’s get into it. The first rule is manage money together only when your relationship is long term in general, I recommend managing money as a couple, but that being said, I do not recommend managing money together unless you are 100% absolutely committed.

And you plan on staying together for ever that’s because if you break up unraveling, your financial lives can be incredibly complicated. For example, having a joint bank account means that both people own it and both people can access the funds you and your partner can spend or withdraw any amount of your balance at any time and being co-signers on loans. And credit cards also means that if one person decides not to pay their fair share or what you’ve agreed, the other owner is on the hook for the entire debt. 100% of that debt, not just half of it. And, and no matter, even if you didn’t spend any of the, that got racked up on that credit card. So the bottom line is that if you are uncertain, how long your relationship will last, or you’ve got concerns about merging money with somebody else, please don’t do it.

You’re better off being safe than sorry, going into it slowly. All right. The second rule is your financial history. A huge part of a successful relationship is building and maintaining a foundation of trust, which includes knowing the details of each other’s financial histories, such as how much debt you owe and your credit ratings. The good news is that even if your partner has less than perfect credit, it, it won’t hurt your credit. Okay. But it could make it more challenging to qualify for a joint credit account, you know, a joint auto loan or a joint mortgage. If that’s something that you wanna do a good place to start is by reviewing your credit report. So if you’re not sure, well, how much do I owe? And you know, what are the accounts I own? All you have to do is pull your credit history. It’s all gonna be there.

You can do that for [email protected] or there are some great credit reporting sites like credit karma that will give you not only your credit reports, but even some of your credit scores. So again, that’s a great place to start if your, you know, really not sure what your credit history is or what your financial history is, rule number three, create financial goals together before you merge money as a couple, it’s essential that you talk about your financial goals. That’s really the best way to know if you’re on the same page, you know, with your finances. And maybe even if you’re on the same page as a couple, talk about what you want to achieve over the next few years and over the long term, like, what do you wanna do about retirement? You know, what are you, what are your dreams for the future? It’s much better to know sooner rather than later, if you have vast differences of opinion.

Let me give you an example. Let’s say your priority is to live frugally and build a sizable retirement nest egg. So you can retire early, but your partner is a free wheeling spender, and they, you know, wanna go on and really live it up. In that case, your financial philosophies may be too far apart to reconcile only. You can make that decision rule, number four, set a joint spending plan once you know your financial histories. And you’ve talked about your goals, I’d like for you to consider how you’re going to handle expenses as a couple while splitting everything, 50 50 could seem like a good idea or a good strategy in the beginning. It may not work out as planned. If one person earns much less than the other. In that case, you might want to divide costs by percentages to make things more. For example, if your partner earns 35% of the total household income and you make 65%, you could pay 65% of the household expenses.

Now I’m not saying that you’ve got to split everything up according to income. Uh, but that’s just one way to approach it. Now, if you go all in and you merge your finances, I, as a couple, you don’t have to worry about dividing up expenses. Instead, you would just pay bills from a joint account. However, as I mentioned, that’s a really big step. And so that’s not something that I’m gonna recommend unless you’re in a 100% committed relationship rule, number five, communicate about money regularly. Even if your financial goals as a couple are aligned. And you, you know, you really do see eye to eye on your short term and long term financial goals, a key to long term success as a couple is to communicate regularly, especially about money. Fortunately, my husband and I have always shared the same views when it comes to our, our money and our lives and our goals.

But I will tell you that doesn’t mean we didn’t have our fair share of disagreements in the early days of our marriage that we really had to work through and resolve. So, you know, it’s not that you can’t overcome differences of philosophies and opinions. I think the idea is just to be open-minded about changing strategies and maybe setting new guidelines. If the way you’re managing money as a couple, isn’t working for you. Unfortunately, what I find is that many couples only talk about money after problems come up and that’s really the wrong approach. Instead, I would encourage you to set a time each week or month to chat about your budget, your debt, income, and plans for the future. You know, a lot of people call it a money date, where you go out for a nice meal or take a walk together. You really just set aside time on a regular basis to make sure or that you’re thinking about, you know, what’s going on with your money.

That’s gonna help you iron out any wrinkles in your relationship and definitely will improve your financial wellbeing. This episode is supported by policy genius. If someone relies on your financial support, whether it’s a child aging parent, or even a business as partner, you need life insurance. Having coverage through your job may not be enough. Most people need as much as 10 times more to properly provide for their families. That’s where policy genius comes in head to policy genius.com and answer a few questions about yourself. In minutes, you can work out how much life I coverage you need and compare personalized quotes to find your best price. You could say 50% or more on life insurance by comparing quotes with policy genius, their licensed experts will help you understand your options and apply for a policy. Remember the policy genius team works for you, not the insurance companies, and they never add on extra fees or sell your information to third parties, head to policy genius.com to get your free life insurance quotes and see how much you could save that’s policy genius.com, rule number six, understand the risks of co-signing debt.

When you co a credit account like a credit card, auto loan or mortgage, you assume equal responsibility for it. And the payment history will appear on both of your credit reports. That means you can both build credit if the payments get made on time. But if one person in a couple fails to pay a cosigned credit it account on time, it’s gonna hurt both of your credit scores. Plus, as I mentioned, you’re both legally responsible for the entire debt, no matter who spent the money. So if you’re in a committed relationship and you decide to cosign a credit account, you wanna be sure that those payments never fall through the cracks. Common question I get is Laura. Well, you know, what if one of us has great credit, but the other one has really poor credit. In that case, co-signing a credit card or a loan with, uh, that person is one way to help them build or improve their credit.

And another option is to add the person with poor credit to a credit card as an authorized user that allows the partner to make purchases, you know, have their own card, but they won’t be legally responsible for the debt as an authorized user. In general, the cards payment history does get reported to both the authorized user’s, uh, credit history and the card owner’s credit reports. But I will say that’s actually not the case for every single card. So if your goal is to help an authorized user, build their credit, make sure that, you know, the payment information is going to get reported onto their credit history. You can just ask the credit card company about that. However, as I mentioned, I only recommend combining your credit accounts, if you are in a solid, committed relationship built on trust, otherwise you could end up with a very large amount of credit card debt if an authorized user abuses your credit card.

And I want you to also note that if you side to apply for a joint credit card with a partner, and you’ve already got credit cards that are just in your name, you don’t need to close them, uh, in a recent podcast called what to know before you cancel a credit card. I cover multiple reasons why closing credit cards can hurt your credit. So you wanna close cards, very, very carefully. All right, rule number seven, be clear about the pros and cons of buying a home. As I mentioned, an increasing number of unmarried couples and partners, and even friends or buying real estate together these days, it may be more affordable to team up and buy a home or an investment property. In some cases, however, real estate with someone else can damage your finances and your relationship. If you’re not careful, when you buy property, you receive a document called a deed, which shows the owner’s names and how you legally own the property together.

If you’re not married, you’ve basically got two options for how to own that property. One is called tenants in common. This gives each person a share of the property and you decide what that is. It could be 50, 50 or 75, 25. When one tenant in common dies, their share goes to their heirs, not to the other property owner. And so each owner can also sell or give away their interest in the property. So each person can really, you know, kind of do whatever they want with their share of the property, which, you know, may not be good for you as a partner. The other option you’ve got is called joint tenants with right of survivorship that gives each person the right to own the property when the other owner die. So their interest automatically passes to the survivor, not to the dead person’s heirs. And this is kind of similar to the way married couples can own property.

Um, married couples have another option. That’s called tenancy by the entirety. This allows spouses to own property together as a single legal entity. Now, if you’re not married, you, you know, you’re not gonna get that legal protection, but if you are married, having tendency by the entirety protects each person because a creditor of one spouse cannot attach and sell the interest of the property that the other spouse owns. And so when one spouse dies, their interest just passes to the surviving spouse, just like with the, the joint tenant ownership that I mentioned. And you’ll also need to decide how to finance a home as a couple. Do you have equal amounts of money for the day down payment to bring to the table? Do you each wanna be on the hook for the mortgage? Each mortgage applicant must show ample income, job history and credit to get approved.

Now, if one partner has low income or poor credit, the other person could be the sole mortgage applicant. Just remember that your not legally responsible to repay a mortgage, unless your name is on the mortgage being named on the deed indicates ownership, but that’s not the same thing as having financial responsibility for a mortgage on the property. So remember that the ownership and the financing of the property are two different things that you’ll need to address in the excitement of buying a home. Don’t forget that you are making a considerable investment and a financial or legal mistake could really jeopardize your entire financial future. So I wanna recommend that you get advice and you might even wanna create a formal ownership agreement, outlining every potential issue you can think of as a couple, for instance, talk about what happens if you disagree on managing the property, or if one person has a financial hardship and they wanna sell out, what if your romantic relationship turns sour and you break up, these are all the kinds of issues that you need to work out before you commit to buying real estate.

As a couple, you don’t wanna assume that you’ll just deal with it down the line. You know, that you’ll just talk through any future disagreements when they happen, because your relationship could be very different in the future than it is right now. Rule number eight, use good financial tools. Whether you decide to manage money as a couple or not, it’s essential to use good financial tools. They can really make managing your finances, you know, seamless and, and pretty easy. And some tools are even free. For example, a free personal finance app, like mint imports, your bank and credit card transactions, allowing you to keep track of your spending and your financial goals on the go. Now, if you prefer a top product with a lot more functionality and reporting, I’m a huge fan of Quicken. So you might wanna check those out. Quicken has a starter version.

That’s about, you know, $35 a year, and it allows you to see your financial accounts and transactions in a dashboard. You can create a budget, manage bills. There’s a lot of functionality, and there are more expensive versions of Quicken, uh, with even more functionality like creating savings goals and investing and simplifying taxes and investments. But I think if you start out with, you know, the lower end, you can always work your way up if you need more functionality. So suppose you and your partner have your own financial accounts. In that case, you could use a program like Quicken to assign expenses that you wanna split. Maybe it’s the mortgage or the rent insurance, groceries utilities. You could put all of those in an account named joint expenses. That way you can run a report each month and see how much you owe and settle up.

At the end of the month, I did a recent podcast called 20 best personal finance and small business digital tools. So if you need some more ideas about great tools, that would highly recommend that show rule number nine, know the spousal I rules saving for retirement is vital to a secure financial future. But what if one person in a couple isn’t working typically, if you’re unmarried and you don’t have income, you’re not eligible to contribute to a tax advantaged retirement account. However, if you decide to tie the knot, married couples who file taxes jointly actually qualify for something called a spousal IRA. It’s just a regular IRA, but it allows a working spouse to make a maximum contribution to an IRA for a non-working spouse for 2021. If both spouses are underage 50 and have a household income of at least $12,000, you can each contribute up to $6,000 to your own IRAs.

And if you’re over 50, that maximum, uh, contribution increases to $7,000 each. So that’s just a little benefit that you get. If you do decide to get married, and one of you it’s maybe to stay home or, you know, isn’t working for a period of time, you wanna make sure that you’re continuing to save for retirement, even when you’re not earning an income and rule number 10, get help from a financial professional when needed, even if managing money is a breeze for you and your partner, it’s often very well to get help from a financial pro. It could be a financial advisor, a retirement planner, a tax accountant, or even an estate attorney. Yes, professionals do cost money. However, getting good advice for retirement planning or navigating any financial challenges can really pay off. You might consult with a financial pro once, or you might work together over the long term to meet your financial goals as a couple, if you’re a first time, couple or even a long time, couple, I hope these tips and rules have given you something to think about.

Also, before we go, if you have not joined my private Facebook group called dominate your dollars, I would love for you to be a part of that community. It’s a really amazing group of people. You can just search for the group on Facebook. Again, it’s dominate your dollars and you can also visit Laura D adams.com where you’ll find my contact page and more about me, my books, and online courses. That’s all for now. I’ll talk to you next week until then here’s to living a richer life. Money girl is a quick and dirty tips podcast. It’s audio engineered by Steve Ricky Berg with editing by Adam Cecil. Our operations and editorial manager is Michelle Marus. Our assistant manager is Emily Miller and our marketing and publicity assistant is Devina Tomlin.

Being a new couple includes many “firsts,” including managing money together or even buying a home. From deciding whether to open a joint bank account or knowing if you should cosign a mortgage, these critical life events can make or break your romance. This post will cover ten money rules every first-time couple should follow.

10 money rules every first-time couple should follow

  1. Manage money together only when your relationship is long-term.
  2. Know your financial history. 
  3. Create financial goals together.
  4. Set a joint spending plan.
  5. Communicate about money regularly.
  6. Understand the risks of cosigning debt.
  7. Be clear about the pros and cons of buying a home.
  8. Use good financial tools.
  9. Know the spousal IRA rules.
  10. Get help from a financial professional when needed.

Following these tips will set you and your partner up for a successful financial future.

1. Manage money together only when your relationship is long-term

In general, I recommend managing money as a couple. However, I don’t recommend it unless you’re 100% committed and plan on staying together forever. That’s because if you break up, unraveling your financial lives can be complicated.

For example, having a joint bank account means that both parties own it and can access the funds. You and your partner can spend or withdraw any amount of your balance at any time. Being co-signers on loans and credit cards means that if one person decides not to pay their fair share, the other owner is on the hook for the entire debt—not just half of what’s owed.

The bottom line is that if you’re uncertain how long your relationship will last or have concerns about merging money with someone else, please don’t do it!

2. Know your financial history

A huge part of a successful relationship is building and maintaining a foundation of trust, which includes knowing the details of each other’s financial histories, such as how much debt you owe and your credit ratings.

The good news is that even if your partner has bad credit, it doesn’t hurt yours. However, it could make it more challenging to qualify for a joint credit account, such as a credit card, auto loan, or mortgage.

Reviewing your credit reports for free at Annualcreditreport.com is a great place to start if you’re not sure what your history is.

3. Create financial goals together

Before you merge money as a couple, it’s essential to talk about your financial goals. It’s the best way to know if you’re on the same page.

Talk about what you want to achieve over the next few years and the long term, such as your ideas about retirement. It’s better to know sooner rather than later if you have vast differences of opinion. For instance, if your priority is to live frugally to build a sizable retirement nest egg, but your partner is a free-wheeling spender, your financial philosophies may be too far apart.

4. Set a joint spending plan

Once you know your financial histories and discuss goals, consider how you’ll handle expenses as a couple. While splitting everything 50/50 may seem like a good strategy, it may not work if one person earns much less than the other.

In that case, you might divide costs by percentages to make things fairer. For example, if your partner earns 35% of the total household income and you make 65%, you could pay 65% of the household expenses.

However, if you go all in and merge your finances as a couple, you won’t have to worry about dividing expenses. Instead, you’ll pay bills from a joint account. However, as I keep mentioning, that’s a big step unless you’re in a 100% committed relationship.

5. Communicate about money regularly

Even if your financial goals as a couple are aligned, a key to long-term success is communicating regularly. Fortunately, my husband and I share the same views when it comes to our money and lives. However, that doesn’t mean we didn’t have our share of disagreements in the early days that we had to resolve. My advice is to be open-minded about changing strategies and setting new guidelines if the way you manage money as a couple isn’t working.

Unfortunately, many couples talk about money only after problems arise, which is the wrong approach. Instead, set a time each week or month to chat about your budget, debt, income, and plans for the future. That will help you iron out any wrinkles in your relationship and improve your financial wellbeing.

6. Understand the risks of cosigning debt

When you cosign a credit account, such as a credit card, auto loan, or mortgage, you assume equal responsibility for it, and the payment history will appear on both of your credit reports. That means you can both build credit if the payments get made on time.

But if one person in a couple fails to pay a cosigned credit account on time, it hurts both of your credit scores. Plus, you’re both legally responsible for the entire debt, no matter who spent the money. So, if you are in a committed relationship and decide to cosign a credit account, be sure payments never fall through the cracks.

If your partner has poor credit, cosigning a credit card or loan is one way to help them build or improve it. Another option is to add them to a credit card as an authorized user. That allows the partner to make purchases, but they won’t be legally responsible for the debt. In general, the card’s payment history gets reported to both the authorized user’s and the card owner’s credit reports.

However, as I mentioned, I only recommend combining your credit accounts if you’re in a solid, committed relationship built on trust. Otherwise, you could end up with a large amount of credit card debt if an authorized user abuses your card.

7. Be clear about the pros and cons of buying a home

An increasing number of unmarried couples and partners are buying real estate. It may be more affordable to team up and buy a home or an investment property in some cases. You can use an online mortgage calculator to help crunch the numbers. However, buying real estate with someone else can damage your finances and relationship if you’re not careful.

When you buy property, you receive a document called a deed, which shows the owners’ names and how you legally own the property. If you’re not married, you have the following options:

  • Tenants in Common gives each person a share of the property, such as 50/50 or 75/25. When one tenant in common dies, their share goes to their heirs—not to the other owner(s). And each owner can sell or give away their interest in the property.
  • Joint Tenants with Right of Survivorship gives each person the right to own the property when the other owner(s) dies. So, their interest automatically passes to the survivor, not to their heirs.

Although married couples can own property as tenants in common or joint tenants, they have another option:

  • Tenancy by the Entirety allows spouses to own property together as a single legal entity. It protects each person because a creditor of one spouse can’t attach and sell the interest of the property that the other spouse owns. And when one spouse dies, their interest passes to the surviving spouse, just like joint tenant ownership.

You’ll also need to decide how to finance a home as a couple. Do you have equal amounts of money for the down payment? And do you each want to be on the hook for a mortgage? Each mortgage applicant must show ample income, job history, and credit scores to get approved.

If one partner has low income or poor credit, the other could be the sole mortgage applicant. Just remember that you’re not legally responsible for repayment unless your name is on a mortgage. Being named on the deed indicates ownership, but that isn’t the same as having financial responsibility for a mortgage on the property.

In the excitement of buying a home, don’t forget that you’re making a considerable investment, and a financial or legal mistake could jeopardize your entire financial future. So, it’s wise to get advice and even create a formal ownership agreement outlining every potential issue you can think of.

For instance, what happens if you disagree on managing the property or if one person has a financial hardship and wants to sell out? What if your romantic relationship turns sour and you break up? These are the kinds of issues that need to get worked out before you commit to buying real estate as a couple.

8. Use good financial tools

Whether you decide to merge money as a couple or not, it’s essential to use good financial tools. They certainly make managing your finances as easy as possible, and some tools are even free.

For example, a free personal finance app, like Mint, imports your bank and credit card transactions, allowing you to keep track of your spending and financial goals on the go. If you prefer a desktop product with more functionality and reporting, I’m a huge fan of Quicken.

Quicken’s starter version costs $35.99 per year and allows you to see your financial accounts and transactions in one place, create a budget, and manage bills. More expensive versions of Quicken are also available with increased functionality, such as creating savings goals and simplifying taxes and investments.

Suppose you and your partner have your own financial accounts. In that case, you can assign expenses you want to split—such as a mortgage, rent, insurance, groceries, and utilities—to a separate account named “joint expenses.” That way, you can see how much you owe and settle up each month.

9. Know the spousal IRA rules

Saving for retirement is vital to a secure financial future, but what if one person in a couple isn’t working? Typically, if you’re unmarried and don’t have income, you’re not eligible to contribute to a tax-advantaged retirement account.

However, if you tie the knot, married couples filing taxes jointly qualify for a spousal IRA. It allows a working spouse to make a maximum contribution to an IRA for a non-working spouse.

For 2021, if both spouses are under age 50 and have a household income of at least $12,000, you can each contribute up to $6,000 to your own IRAs. If you’re over 50, the maximum contribution increases to $7,000.

10. Get help from a financial professional when needed

Even if managing money is a breeze for you and your partner, it’s often wise to get help from a financial pro, such as a financial advisor, retirement planner, tax accountant, or estate attorney.

Yes, professionals cost money; however, getting good advice for retirement planning or navigating financial challenges can really pay off. You might consult with a financial pro once or work together over the long term to meet your financial goals as a couple.

This article originally appeared on Quick and Dirty Tips

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About the Author

Laura Adams, Quick and Dirty Tips

Laura Adams, Quick and Dirty Tips

Laura Adams is an award-winning author of multiple books, including Money Girl’s Smart Moves to Grow Rich. Her newest title, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, is an Amazon No. 1 New Release. Laura’s been the writer and host of the popular Money Girl Podcast, a top weekly audio show in Apple Podcasts, since 2008. She’s a frequent source for the national media and has been featured on most major news outlets including NBC, CBS, ABC FOX, Bloomberg, NPR, The New York Times, The Wall Street Journal, The Washington Post, Money, Time, Kiplinger’s, USA Today, U.S News, Huffington Post, Marketplace, Forbes, Fortune, Consumer Reports, MSN, and many other radio, print, and online publications. Millions of readers and listeners benefit from her practical financial advice. Her mission is to empower consumers to live richer lives through her podcasting, speaking, spokesperson, teaching, and advocacy work. Laura received an MBA from the University of Florida. Visit LauraDAdams.com to learn more and connect with her.

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