Monday, September 19

Combining Finances

Source: via Grace on Pinterest

     For the better part of a week I've been thinking about how I wanted to organize this post. While I'd really like to just dive right into the logistics of it all I think it would be better to start with what drove our decision to put all of our money in the same pot. Because really its the first step that's the hardest part of the whole process.

A Little Background
    SSF and I have been living together for 4 years now and through all that time we've been splitting up our expenses as fairly as possible. Of course though back in those early days I was paying off my credit cards and as a result the responsibility fell on SSF to pay a little lot more than half of our monthly expenses. Despite that we did experiment a little with combined finances by opening a joint savings account together shortly after we moved to Maryland. Every month we would contribute what we could to that account. In a way I feel like it solidified our future together. To me, that savings account was like a commitment  to SSF that I was in it for the long haul.

The Decision
    Fast forward to July of this year. Our financial situation is a much different (no more cc debt), but we still have a huge hurdle in front of us, my student loans. It would have probably been easier to just continue down our path of "separate and kind of equal" finances but we wanted something better for the future. In reality, we were each only seeing one half of the big picture. He knew what he was spending (and had leftover each month) and I knew what I was doing. At this point, we both wanted to see it all. Not only that, but we wanted to maximize our budget as much as possible and lay the foundation for a better financial future together.  The only conceivable way to do that was to put it all in one place and see where it goes. I don't think it was really a hard decision for either of us. We are both very open about our finances and tell each other each and every excruciating detail. We aren't perfect though. We both check the account religiously and at times we ask suspiciously "what was that money for". But you get an answer and move on.

How to Make it Work for You
     I'm not going to make any promises that combining finances is the answer for everyone. It's not. I'm kind of a traditionalist and have always believed that my future husband and I would share finances. Mentally though it's a lot harder than you think.

Start Small: Don't try to go all in all at once. SSF and I started with a savings account. You could also start with a shared account for expenses (this mostly makes sense if you live together). Each month you put your half of the expenses in and it all gets paid out of one account. This eases you into the concept of "our money".

Bare it All: Seriously. Disclose all of your spending/ debts/ etc. This is the hardest part, but most important. Do you think I wanted to tell SSF about all my debt? Of course not. I was embarrassed, ashamed, mortified. But I did, and you know what? He was supportive. Well at first we was upset (naturally) but once he overcame the initial shock he was ready to tackle with me.

Set Boundaries: When it comes to combining finances, most experts will recommend setting a spending limit that you can spend up to without consulting your spouse/significant other. SSF and I haven't really got there yet because we are stilling trying to figure out what disposable income (if any) we have at the end of the month but this is the logical next step.

Keep the Conversation Going: Sharing finances isn't a one time thing. It is an on-going, ever-evolving process. Things change, and you have to be able to adapt. SSF and I have an on-going conversation about money. What we should do with any extra, what we want to save for, and strategy for paying off existing debts.

Later this week I will go into a little more detail about the logistics. How we decided what account to pool in, our short-term goals, long-term goals, and of course how we've been tracking our expenses.

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