Financial Planning for Couples
It’s not easy to talk about the fundamentals of financial management, especially in a relationship. Learning how to talk about money when dating is crucial, however, as it sets the stage for a healthy financial future together. At Float, we’re dedicated to providing couples with the tools they need to gain financial control of their future. So, here are some resources we’ve created with you in mind.
Statistics About Money and Marriage
Want to learn more about marriage and finances? Or, simply want to see how we develop financial planning tips for couples? Here are some of the statistics regarding money and marriage that we consider:
- 88% of people in marriages or relationships say that they have a good idea of their spouse’s or significant other’s financial fitness.
- However, only 50% know their partner’s credit score.
- In terms of what spouses and significant others know about their partners, credit score was reported as the one that fewest partners know about, followed by credit limits and account balances.
- When asked, spouses and significant others said that, in regards to money management and financial health, they know most about their partner’s debt level.
- Overall, Americans are interested in sharing financial fitness when they shoulder financial responsibility, such as combining finances after marriage, guiding financial fitness of dependents or elderly relatives, and sharing rent responsibilities.
- For married couples or those who are recently engaged, there is a greater interest in sharing financial information. A total of 88% of people said they’re interested in seeing and sharing information (or a combination of the too, either seeing or sharing).
How to Talk About Money Management in a Relationship
Statistics clearly show that wealth management and money management should be a key topic amongst couples looking to get married. Our studies show that even couples who are just getting started are interested in not only seeing their partner’s financial information but also in sharing theirs as well.
However, this can be tricky. Not everybody learned about the fundamentals of financial management in a way that allows them to be comfortable with combining finances after marriage or even talking about their finances with their partner.
We asked Americans who they feel most comfortable sharing their credit score with, and nearly 75% said that they’re extremely comfortable sharing their credit score with their spouse or partner. This shows that most people are willing to share financial information with a partner; they just might not know how to broach the subject.
Need to learn how to talk about money management in a relationship? We’ve created this helpful guide for you, but to summarize it, you’ll want to:
- Start with the Basics: View financial intimacy as something that you develop over time and nurture it as you would any other area of the relationship.
- Talk About Financial Futures: Talk about what your hopes and dreams are as they relate to money so that you can get a good idea of whether or not you guys are a financial match.
- Talk About Shared Goals: Even if you don’t open a joint bank account for couples or split utility bills, eventually, you will both find yourselves working towards a common financial goal. Talk about how much you earn, how much you owe in debt, and the future expenses you might incur.
- Hold Each Other Accountable: Hold them accountable as you both work towards merging your finances and lifestyles. In this sense, financial planning for couples is crucial, as it’s the only way you’re able to get a full overview of your finances in the marriage.
How to Securely Share Your Finances in Marriage
Whether you’re married with separate finances, are interested in combining finances after marriage, or simply want to begin openly sharing your financial fitness with a new partner, you’ll want to ensure you do it securely.
When surveyed about the desired features of a credit monitoring app for couples, nearly 75% of Americans said that it’s imperative that their data is safe and their privacy is protected. And, that’s fair. You shouldn’t trust a credit monitoring app or any other financial app to handle your data unless it’s safe and secure.
As a part of privacy and security, most responded that one of the factors that would allow them to feel a sense of security was the ability to control what kind of information they share with third parties, including partners, friends, and family members.
We’ve taken that into account, developing a credit monitoring app that gives you total autonomy over how much information you share. And, we’ve even tailored the solution to fit different couples at various stages in their relationship.
Building financial intimacy takes time like anything else, so we’ve made it possible for you to choose from one of three different levels of sharing:
- Emoji: This is pretty self-explanatory of where your credit is at without having to share a specific score or even a credit range.
- Credit Range: Once things start to get a bit more serious, you can share a credit range with your partner. This gives them a better idea of your financial health without divulging everything.
- Credit Score: Combining finances after marriage most certainly means that you’ll have to share your credit score with your new spouse.
What to Know About Couples’ Credit Scores: FICO vs. VantageScore
It’s important to understand that when you get married, you don’t combine your credit scores. Just as you each maintain an individual social security number and perhaps even individual bank accounts, you both also retain your individual credit scores.
Not sure how to read your credit report? First, it’s important to understand that you’ll likely see a few floating around. You can access scores from each of the three major credit reporting bureaus: Equifax, Experian, and TransUnion.
Each of your scores will likely vary a bit from bureau to bureau, which is why they use scoring systems to provide you with a more balanced, comprehensive view of your score.
The FICO scoring system was designed to optimize the predictive value of credit data. VantageScore is a similar scoring system but was actually created by the three major credit reporting bureaus.
What’s the Difference Between FICO and VantageScore?
Both FICO and VantageScore are credit scoring models. However, there are differences between the two. Here are some of the main differences:
- VantageScore uses a single scoring model sourced from the three major credit reporting bureaus (Experian, Equifax, or TransUnion) whereas FICO generates a separate score for each of the three individual bureaus.
- The credit score range for VantageScore is from 300 to 850, which is the same for the base FICO score. However, FICO also has an industry-specific score range from 250 to 900.
- What’s considered to be in the “good” range for a credit score between the two might vary; 670 is considered good for FICO and 700 is considered good for VantageScore.
- VantageScore views collection accounts differently. They ignore and don’t report paid collection accounts and give less weight to medical collections.
At Float, we use the VantageScore to calculate you and your partner’s credit score.
Explore the Benefits of Credit Monitoring for Couples
Our most significant piece of advice regarding financial planning for couples? Take advantage of the benefits of sharing your financial status and credit score provide you with.
Let’s begin with why couples use Float in the first place:
- 72% use it to monitor their credit score.
- 42% use it to help them learn how to improve their credit score.
- 34% use it to help them identify inaccurate or incomplete information on their credit report.
While these are all reasons for using a financial app as part of your personal finance journey, they’re also all benefits. Merely taking a look at your credit report or sharing a bank account with a partner isn’t going to provide you with the tips and tools you need to financially succeed as a couple.
Therefore, credit monitoring for couples is a crucial part of money management and wealth management in a relationship. And, along with the ability to monitor your credit and identify your weaknesses, other benefits include the fact that:
- It’s free!
- It’s incredibly easy to use.
- You can also view the credit score of your friends and family, making it easier to understand how your financial health compares to that of your peers.
- You have control over how much information you share. At all times.
- It makes difficult financial conversations easier.
- You can trust that your data is safe when sharing via the app versus sending a full report to a third party.
Financial Wellness Tips & FAQ About Financial Planning for Couples
Does your credit score affect your partner’s credit score?
No! When combining finances after marriage, you don’t combine your credit scores. Just as you’ve always had your own credit score, you will continue to have your own credit score even after signing marriage documents. However, it could affect your ability to get a joint loan, especially a larger loan like the one you’d need to buy a house together.
Read our guide to Couples’ Credit Scores: Does My Credit Score Affect My Spouse for more information.
Are you allowed to share your credit score with other people?
Yes! There is no law prohibiting you from sharing this information. In fact, as detailed above, it can actually be quite beneficial. We encourage all users to share with their significant other.
Read our guide on 5 Reasons to Share Your Credit Report for more information.
What is a good credit score to aim for?
The Equifax credit score ranges from 280-850, which is a little bit lower than the Experian range and your Float score, for example, which range from 300-850. And, according to recently released data, the average credit score in the United States is 682. Usually, when couples are looking to buy a house, the credit score needed to get a good loan is at least 660.
Read our guide on What is a Good Credit Score? Credit Rating Explained for more information.
How can we pay off debt faster?
Talking about your finances first is a good start. Sit down, figure out how much each of you owe in debt, and then come up with a debt repayment strategy that works best for your income and lifestyle. Use a debt payoff calculator and then consider different strategies such as debt avalanche or debt snowball.
Read our guide on Debt Payoff Calculator: How to Decide Which Debt to Pay Off First for more information.
Should we open a joint bank account before we’re married?
There are pros and cons to joint bank accounts for couples, with the biggest benefits being that it gives both partners access to each other’s cash for paying joint bills and making other related payments. Most couples find that joint bank accounts are best when they can receive rewards and benefits from the account and are also best used for shared responsibilities such as mortgage payments, utility bills, and groceries.
Read our guide to the Best Joint Bank Account for Couples in 2020 for more information.
Download Float for Couples
Have another question we didn’t answer in our guide to financial planning for couples? Get in touch and speak with one of our experts and we’ll help you make better use of Float as it relates to your financial fitness.