Whether you’re getting ready to move in with your new partner or feeling ready to share more of life’s responsibilities, effective money management is key. From budgeting to long-term planning, we’ve covered 5 steps to financial literacy with your new partner in this handy guide.
5 tips for money management with your new partner
Start simple and communicate
In the early stages of a relationship, honesty is vital. If one of you is struggling with debt or has substantial financial commitments, it’s crucial to be honest about it now.
Early conversations should include the topic of money and how it was handled as you were both growing up. Was it never mentioned, or were you living on a tight budget? When you know about any financial stress your partner might’ve experienced in the past, you’ll be able to develop a compassionate approach to your shared money management in future.
Create a budget together
Running the numbers is your second major step.
You should aim to set a shared budget that reflects both of your respective incomes, expenses, and financial goals. If you’re lucky enough to have shared financial goals with your partner, then this step will feel almost natural.
Take your debt away from the value of your assets to figure out your personal wealth. If you’ve been managing your money alone for some time, it could be worth having a discussion over whether a shared account would work for you as a couple.
Manage your debts
Next, you’ll need to think about handling any existing or upcoming debts. Whether it’s monthly credit card payments or a personal loan, make sure you’re both open and honest about your personal debt commitments. From there, you can identify opportunities to help each other.
While it can be a tricky topic to discuss, debt management also involves building your credit score. It’s worth bearing in mind that changing your name could affect your credit score, so it’s worth checking with your bank if you’re planning to get married.
Start an emergency fund
An emergency fund should be an integral part of your time together, strengthening your financial security in times of hardship.
Aside from your standard everyday budget and monthly savings allocation, your emergency fund will give you options when you face unexpected challenges. From injury to costly car maintenance bills, there are several things that could trigger a large upfront cost. With an emergency fund to back you up, you can focus on everyday control.
Set short and long-term goals
Finally, clear goal setting will help you to achieve greater financial control and independence too. When you have ambitious yet realistic visions for the future, you’ll be more likely to have an incentive that helps you save money effectively.
Whether you’re working towards a brand-new car or your first home, discussing your plans with your partner is the most effective way to realise a vision. Plus, if you have any money left after building a budget together, you can use that to save for short-term goals too.
