3 things to consider when combining assets with your partner

Bringing your partner into your finances proves commitment to your relationship. Read about how to plan ways to merge assets with your partner here.

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For many couples, the process of merging assets and finances begins well before marriage, especially with more couples living together before tying the knot. Bringing your partner into your finances can be an exciting process, as it signals a new level of commitment to your relationship. Nevertheless, honesty, trust, and awareness are critical to ensure both partners are protected and happy.

If you’re planning to merge assets with your partner—or have already started—consider the following, which may help the process go more smoothly and end successfully

1. Prenuptial agreements aren't just for the rich

While most of us associate"prenups"with the ultra-wealthy, these agreements are becoming more commonplace as many young adults wait longer to get married. If you're considering marriage in your late 20s or 30s, you may have accumulated more wealth than you realize, especially if you have investment accounts or own a house.

If you're committed to each other but not married, a prenuptial agreement—or "no-nup”—provides a clear-cut approach to splitting or maintaining your assets if the worst-case scenario occurs. And while no one wants to think about the worst-case scenario before tying the knot, knowing that your retirement savings or future inheritance won't be jeopardized can be very reassuring.

2. Set a joint budget based on both incomes

If you're just beginning to merge your finances and assets, one of the first steps should be creating a budget together that takes into account both incomes. It's perfectly reasonable to keep individual budgets, in addition to a joint budget, if each of you has separate financial goals. Initially, your joint budget may include may only the include the household expenses. Over time, it may expand to saving for retirement or paying your children's educational expenses.

At the same time, it can be helpful to divide the financial roles in your household, just as you may split up other responsibilities. All couples are different; some choose to split up the financial responsibilities and others prefer to do everything together. Over time, you'll figure out which roles are best suited for each of you.

3. Start small and build slowly

We're all aware of the saying,"Rome wasn't built in a day." The same is true for your joint finances. If you and your partner currently have separate financial lives, you don't have to instantly merge them once you're married or decide to get married. Instead, it's typically better to start small and slowly grow together financially.

Opening a joint checking account can be a good introduction to learning how to manage your money together. If you live together, you can use this account to split and pay household bills. Once you have a better understanding of each other's budgeting and spending habits, you can begin to save for larger joint goals, such as buying a car or home together.

While the majority of committed couples choose to merge their assets, not all couples do. It's up to you and your partner to decide what makes the most sense for your relationship based on your individual and joint goals, as well as your current financial circumstances. If you're still unsure of how to approach joint finances, consider working with a trusted financial advisor who can help weigh the pros and cons and develop a joint financial plan.

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Article copyright 2019 Catherine Schnaubelt from Forbes. Reprinted from the January 31, 2019 issue with permission from Forbes.
The statements and opinions expressed in this article are those of the author. Fidelity Investments cannot guarantee the accuracy or completeness of any statements or data.
This reprint is supplied by Fidelity Brokerage Services LLC, Member NYSE, SIPC.
The third-party provider of the reprint permission and Fidelity Investments are independent entities and are not legally affiliated.

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