Money management is usually pretty straightforward when you’re on your own. But when you make the switch to couple hood – through marriage or common law partnership – managing for two brings fresh opportunities and challenges. Whether it’s banking, budgeting or investing, figuring out some key decisions right at the beginning can keep your financial co-existence stress-free.
How to manage finances as a couple.
Bank accounts: joint or separate?
Some couples prefer to keep things separate. Others like the convenience of joint accounts. Why not try both?
A joint chequing account can cover shared expenses like rent, utilities or grocery costs. A joint savings account can help you save for vacations, or big purchases like a home or automobile. Open up lines of communication to discuss what the accounts are for and how much you can each contribute.
Supporting your joint account with a jointly held line of credit can make it easier to handle unexpected expenses. Just be sure you are comfortable being responsible for any funds your partner may use.
Keeping your own accounts and credit cards helps maintain your individual credit ratings while living together. And small accounts for personal spending can not only help keep the peace, but they can also even come in handy for top-secret purchases - like anniversary gifts.
Budgeting: blissful planning.
It's okay to keep small secrets about gifts. But when it comes to managing joint accounts and budgets, an open, honest approach is best, especially if one partner earns significantly more than the other. By discussing your finances openly and frequently you’ll prevent hard feelings. Together, you can:
- Track your collective goals, savings, expenses and income.
- Grow your money with more ease. In some ways, budgeting for two can be easier than budgeting for one. Fixed living expenses can be paid out of a joint account. And if you’re both making regular contributions, saving and investing together, you may find your accounts accumulating money.
Investing: long-term options.
Decisions. Decisions. There is lots to focus on when you first get together or decide to marry. But sooner rather than later, you should be thinking about your long term money plans. Here’s some advice on how you can use the power of teamwork to grow your money manifolds, now and in retirement:
- Maximize your tax benefits today and for the future. Save efficiently by planning RRSP or TFSA contributions together and maximize your tax benefits today and for the future.
- In addition to a personal RRSP account, you can also open a Spousal RRSP that lets one spouse get the tax break for RRSP contributions while the other spouse owns the funds. This can help create more equal income in retirement, and minimize your family's tax bill.
- If kids are part of your plans, you may want to study up on education savings plans, before sleep deprivation and your new household addition arrive.
Get an action plan made for couples.
You could always do it yourself but getting a specialist to help you integrate your finances as a couple can help you navigate the many complexities of it, while giving you a fresh perspective on things.
Borrow tried and tested investment, budgeting and banking strategies with an action plan that is customized to your financial situation, risk tolerance and goals – couple and individual.
Plus, get the tools to help you track your and your partner’s progress towards achieving them.