It’s no secret that money trouble is a leading cause of divorce — financial issues can take a serious toll on anyone's emotional health, and that can affect the well-being of your relationship. Therefore, it makes sense for every serious couple to have a legit financial plan before considering combining their resources.
To gain professional insight in the matter, Personal Space spoke to Ed Kozun III, owner/president of Kozun Capital Management, who provides comprehensive financial services to clients, such as financial planning and wealth management.
He notes that it can be a great idea: After all, couples who combine finances may be eligible for certain perks, including the possibility of a bigger tax break, a bigger house, or even an earlier retirement. However, before jumping in head first, Kozun suggests following these steps:
Discuss Financial Goals
According to Kozun, the very first thing to discuss (before combining finances) is what your household goals are and how those objectives reflect your values. Each person should strive to be as transparent as possible with regards to debt, assets, desired lifestyle, etc. Having these awkward conversations upfront will actually have the benefit of paving the way for more open communication about other issues later.
Build a Budget
The next step is to create a realistic financial plan that is in line with those goals. Budgeting how much you can afford to spend while honoring your saving goals will save you from living above your means.
Establish a Joint Checking Account
In Kozun’s experience, couples fight less when they create a shared account for some savings and bills, while also holding individual accounts that are used for smaller month-to-month expenses. He suggests choosing an amount of money that each person can spend freely per month that won’t affect their fixed expenses. This will avoid some of the little fights couples have over money.
Autopay Your Bills
Arranging as many recurrent bills as possible on autopay is an easy way to ensure that there are no late fees. Simplifying the billing process also helps to minimize stress.
Save for Retirement
It's well worth the effort to plan to put aside some money after fixed expenses are paid specifically for retirement. Kozun usually suggests stashing 10% of income, or whatever amount makes sense within your budget.
In closing, while this plan is practical for most, people who have a great deal of debt, income-based repayment loans, or more complicated financial matters should seek an expert's opinion before combining finances. Financial planners can assess whether finances are best kept separate, and/or can develop a plan to keep debt under control and paid off in the most efficient manner.
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