Finances in a relationship need not be daunting. Establishing a fair and resilient financial plan early on is key, akin to nurturing a money tree.
Consider this adaptable framework for most financial scenarios:
- Choose a “starting date” to begin this financial journey. Each partner retains their individual savings/assets accumulated before this date.
- From the starting date forward, all income, including bonuses and other extras, is deposited into a shared bank account.
- Commit to investing a minimum of 10% of the total income into a family future fund, such as retirement savings, with regular investments.
- Allocate 20% of the total income for personal use, equally distributed between both partners’ private accounts from the shared account.
- The remaining 70% is earmarked for joint expenses: housing, groceries, family vacations, vehicles, insurance, and more.
Notes:
- The 20% personal allocation is discretionary, meant for individual pleasures like social outings, gadgets, apparel, hobbies, and sports.
- Existing debts are collectively addressed, paid from the shared account, while new personal debts remain individual responsibilities.
- Significant pre-existing personal funds should be managed carefully to maintain balance. These funds remain untouched unless: They’re contributed to the shared account, becoming joint funds. They’re offered as a loan for mutual benefits (e.g., home purchase) under terms comparable to external financing, with the intention of joint repayment. There’s a mutual decision to use the funds for a common advantage, like buying a vehicle. In this case, a “hypothetical loan” at 0% interest over a maximum of 10 years is established, repayable from the shared account or considered a gift at a rate of 10% per annum, thus fully integrating into joint property after a decade.
- In the event of a disagreement over a large expense, it’s essential to weigh its value. If deemed worthwhile, either match the amount in the partner’s personal account or agree to spend it from personal funds, with an understanding that 10% of the initial sum transitions to joint ownership annually. After 10 years, the partner is entitled to 50% of the original value in the event of separation. These measures are practical for substantial expenditures (e.g., over €10,000).
- Surplus joint funds flow into a shared savings account.
- An emergency fund equivalent to six months of expenses is maintained in a shared savings account.
- Provisions for anticipated sporadic costs, such as home upkeep or vehicle maintenance, are made monthly into a joint account.
- In the event of a separation, assets tied to the shared account, investments, and related properties are divided equally. Personal assets remain with the original owner.
- Inheritances are classified as personal income and are directed to the respective individual’s private account.
- Disparities in pension contributions during the relationship are addressed at separation, with the differential amount split and disbursed at the highest tax rate.
- Should one partner make career concessions for family priorities, an adjustment in the personal income distribution may be made to compensate. This decision should be jointly agreed upon.
This approach strives for equitable balance, ensuring both partners enjoy life together without financial disparity or dependency. It accommodates single or disparate incomes, allowing both parties to accumulate personal wealth while jointly managing monthly finances and long-term goals.