More important, bad credit could be a red flag for bad financial habits. Be aware that if your mate maxes out or defaults on a joint account, it can damage both of your credit scores and you’d both held responsible for any debts incurred. And going forward, states with community property laws may consider any credit applications or debts incurred during your marriage as joint debt. In cases of bad credit, it’s best to keep at least some finances separate while you work on raising the bad score. Again, Tom, this is where it’s critical to know what you’re getting into. You don’t want to be a case of “till debt do you part.”
Do you have any other specific tips?
My overriding rule is this:
Communicate. This is a partnership, and you are a team. Even if one person manages the bills, the other should know what’s going on. There shouldn’t ever be any surprises, because both you and your partner should be regularly checking in on the state of your financial union.
I think people assign a lot of unnecessary anxiety to the money issue. You may find that it’s actually a lot of fun to join forces. For one thing, two incomes means more money. And more money means you can save more—and splurge more. In addition to that joint account for ordinary expenses, you should have a joint savings account that you both contribute to, thinking about both fun larger expenses (like vacations) and longer-term goals (like homeownership).
Is there a way you can take all this money stuff and make it more relatable?
One thing I’ve found helpful? Figure out your combined “hourly” wage. Take your household income and divide it by 2,000—that’s fifty 40-hour work weeks and it’s the standard number we typically work in a year (because Americans get two weeks of vacation). So, if your household take-home income is $80,000, divide that by 2,000 and you have $40 an hour. That’s your household “hourly wage.”
What I like about this exercise is that it’s easy to crunch the numbers and see exactly how hard (or rather, how long) you’d have to work to earn whatever it is you want to splurge on. For example, if you guys want to buy a $400 tech gizmo, you each would have to work for 10 hours to cover that item.
Twice the sweat-equity means half the work, and that’s when being a member of a “team’ has its advantages. You should both be maxing out your 401(k) plans to the best of your ability and setting aside savings for those big long-term goals (like paying for your kids’ education!) but have a little fun while you’re starting out and set a medium-sized goal for yourselves.
For example: To save for a $2,000 vacation, set aside $42 a week and you can head overseas in a year. But the more you save now, the quicker you can get away! Set aside $84 a week, and you can take that vacation in six months.