Merging bank accounts and finances with a significant other is a big step in commitment. But many of us will do it sooner than we expected to because of practicality, such as because of needing to pay rent and bills together. However, linking your finances without thorough discussion first can put you at risk. Here’s what you need to ask each other before you join any financial accounts.
This is a tough topic for some people to talk about, but it’s important that you do so. Most people will have faced debt at some point, and it shouldn’t be as taboo as it still is to talk about. Some debt, like student loan debt, seems to be easier to discuss than others, like credit card debt.
Most people fall into debt because of life circumstances or a lack of financial education, rather than recklessness. Having conversations about types of debt, how they got into it, and what they are doing to get out of it will help you understand if you’re ready to link finances.
Linking your finances with someone in significant debt or with a trend of defaulting on repayments can negatively impact your credit score. If they have got into debt because they have poor financial management, this could also mean they spend your hard-earned money without much thought, too. However, someone in debt for understandable reasons, such as a period of unemployment, is less of a risk when it comes to linking finances.
Your partner might say they don’t have any debt – but did they in the past? A previous debt repayment programme, or bankruptcy might have cleared their debts but still have them in a precarious financial position. For example, bankruptcy can significantly impact your ability to access lines of credit or get a mortgage. If your partner doesn’t reveal previous debt, it can mean they are hiding some financial habits from you – or that a future joint application could impact your own ability to access credit or get a mortgage, too.
