The new year often causes us to take a serious look at our finances, start with fresh budgets, and make plans for fruitful futures. By the time February 14th — Valentine’s Day — rolls around, we might also begin to consider how our relationships factor into our plans. According to American Express Spending & Saving data, 8 percent of Americans are expecting or planning marriage proposals, which bring about expenses such as an average $2,345 spent on engagement rings to pop the question. If marriage isn’t quite part of your plans this year, you might still consider other financial moves that show your Valentine that you are committed. Here are 10 to keep in mind as you celebrate Valentine’s Day.
- 1. Unite Your Expenses
- 2. Create a Living-Together Agreement
- 3. Share Expenses with Joint Checking Accounts
- 4. Save for Your Future with a Joint Savings Account
- 5. Create a Budget Together
- 6. Work on Improving Credit
- 7. Plan a Great Beginning and Pay Down Debt
- 8. Discuss Your Financial Plans for the Future
- 9. Make an Investment or Join an Investment Club Together
- 10. Share Your Financial Dreams with Your Partner
1. Unite Your Expenses
Living with and sharing the same space with your Valentine isn’t for everyone, but outside of actually walking down the aisle, is a significant indication of commitment to the relationship. Besides the commitment, however, cohabitation can be a smart financial move for both parties. You not only share your space and time but, in many cases, you can split your day-to-day expenses in half, at the least. Because of the additional space required, you both may need to consider moving into a slightly larger home. At first glance, the increased rental payment and utilities might seem like a more expensive alternative. However, if you are spending the majority of your time at your mate’s crib, it may be more fiscally responsible for both parties to eliminate one of the rent payments altogether, and split the other.
2. Create a Living-Together Agreement
Making the decision to cohabitate is a significant indication of commitment to the relationship, however, making sure you have an agreement regarding expenses and expectations can take it a step further and result in a more serious decision. If you are already living together or plan to live together, a living-together agreement regarding the lease, sharing household expenses, and other matters can save you later when it comes to potential misunderstandings and issues. Although the average engagement ring costs around $2,000, problems that occur after living together without an agreement can end up costing you both significantly more. Even if it isn’t anything “official”, it’s smart to be sure everyone is on the same page and knows what to expect rather than just moving together and letting things roll as they may.
Sharing a checking account is one of the most substantial signs of commitment in a relationship. Even if you and your partner aren’t planning marriage, you may already share a home together or other expenses. You are most likely already participating in a number of expenses and activities together. Opening a bank account together that allows you both to share in joint spending and earning requires not just a commitment to the relationship, but a great deal of trust in the other person. Because it’s the beginning of the year and consumers are working on new budgets and financial plans, many banks offer special deals and promotions when you open a new account. You may even encounter an offer that covers, or contributes to, your Valentine’s Day dinner this year.
4. Save for Your Future with a Joint Savings Account
Many banks also offer promotions for new savings accounts as well. Maybe you and your Valentine aren’t prepared on the 14th to start planning your marriage. A joint savings account will allow you both to contribute to your plans for the future, whether it’s saving for the wedding or a couple’s trip to the Caribbean. Saving now for these types of events together can eliminate some of the stress and problems you might encounter in the future, resulting in a much happier and financially stable union. Not to mention you won’t have to start out in debt due to using credit cards or loans to finance these events. If you find that you or your partner have problems putting money away, joint savings accounts are a good way to hold each other accountable. Check with your financial institution for automatic transfer opportunities and services that make saving easier.
5. Create a Budget Together
Even if you aren’t quite ready to make a marriage proposal, creating and sharing budgets together can show a great deal of commitment not just to your own future, but to your future as a couple as well. Because couples often participate in similar activities and may already share expenses when eating out, it’s smart to create a budget and then hold each other to the budget. It’s much easier to turn down extra lattes and fast food when you both have something at stake, and if you have to answer to someone else. If you prefer to keep your finances separate at this point, you can help each other with your individual budgets, which can positively affect your financial future as well. And, if one party has yet to create a budget of his or her own, now is a good time to look ahead and get started.
6. Work on Improving Credit
If you plan on getting married or buying a home together in the future, both parties can show their commitment to the relationship and the best future possible by addressing your credit now. Waiting until you actually need a decent credit rating to begin making improvements is going to result in increased stress and even possible denial when you decide to seek out a mortgage loan for a home. Further, your credit rating can mean the difference between a lower, less expensive interest rate, and a higher one that costs you and your partner hundreds and even thousands of dollars more. You are each allowed a free credit report every year from all three credit bureaus. Making sure you correct errors and address accounts negatively affecting your credit can go a long way in showing you are committed to the relationship’s future.
7. Plan a Great Beginning and Pay Down Debt
When you examine your credit reports, you might realize you have a significant amount of debt that needs to be paid down. If you make a plan to pay off the accounts and attempt to catch up accounts with late payments, you can contribute a cleaner, healthier financial outlook once you and your Valentine begin your lives together. While paying down debt is never an easy task, it’s best to begin now and create a realistic plan for gaining control of your finances so that you and your partner have a better chance at a financially successful life together. Further, you don’t want to be the one who brings the credit rating down once you decide to buy a home together, simply because you didn’t pay down debt.
8. Discuss Your Financial Plans for the Future
You don’t necessarily have to propose to your Valentine to show him or her that you’re all in. Show your commitment by being completely open about your financial situation and the plans you have for the future. Although this type of discussion can be difficult (and often completely avoided), you can avoid issues in the future that can arise simply because one party wasn’t informed of the other’s plans. According to the data shared, the top spending behavior that drives couples crazy and causes problems is spending on frivolous expenditures and not seeking sales, coupons, or reward points. If you are part of the 24 percent that this behavior bothers, it’s best to get it ironed out now rather than later.
9. Make an Investment or Join an Investment Club Together
Making investments that benefit your family in the future can be complicated and overwhelming. If you aren’t yet sure of the types of investments that are best for you and your partner, join an investment club together. These groups allow you to learn the ins and outs of investment and provide a great deal of information that you can both benefit from, even if you don’t end up in holy matrimony in the future. You not only learn together, but you can create a plan for your future together, without yet making a decision to invest or spending any money. You can create your investment club together, or join a club online through resources such as Better Investing. Various groups also allow members to pool resources when you do decide to make your investment.
With 80 percent of couples planning to celebrate Valentine’s Day this year, resulting in an average of approximately $212 spent, it’s clear that it’s a holiday that many take seriously. Although there are various resources suggesting ways you should save or spend on this holiday, nothing shows commitment more than sharing your dreams for the future, and in many cases, it doesn’t cost you anything. This can mean sharing a new career path, discussing whether you are your partner plan to stay home with children, or just explaining that your vision of the future includes him or her. Taking this opportunity to share your financial dreams can get you started on the right foot and lead to a stronger relationship in the future.
Christina Majaski writes about credit cards and personal money management for MyBankTracker.