I imagine all of us have “gone Dutch” on a date. When each person pays his or her own way during an evening out, it can be easier to maintain independence and limit obligations.
Originally, “Dutch treat” was a derogatory phrase meaning no treat at all. And when it comes to personal finances with your partner, “going Dutch” is just that: no treat.
I often work with couples who have not combined their accounts. Operating under the misguided assumption that their finances are separate, they have agreements about who pays which bills.
Some never merged their finances after becoming a couple, while others divided their money because one or both people couldn’t keep financial agreements. Either way, the intent was to maintain financial independence and protect themselves from their partner’s financial problems.
Cheri and I did not immediately merge our finances. In fact, our banks merged before we did. It took moving from Chicago to Durango to finally open joint accounts.
Going Dutch in a long-term relationship doesn’t give partners financial independence. The truth is that if you expect your partner to pay some of the bills you aren’t, you are interdependent.
Don’t believe me? How would you have to alter your spending, saving and investing if your partner suddenly lost his or her income? Unless you make 100 percent of the money needed to maintain your combined lifestyle, there would be a change. For many couples, that change would be significant and could jeopardize their ability to pay a mortgage and keep up with obligations without depleting their savings. Some could face bankruptcy in weeks or months.
Rather than being independent or interdependent, I recommend being mutually supportive. This means having shared dreams, priorities and finances. The benefit is a purpose that draws you together and uses your combined income to achieve mutual goals.
If you are going Dutch with your partner or don’t have any financial plan at all, here’s how to get started:
Find a shared dream. This can be fun as you work together to find a mutual goal that will make taking control of your money worth the effort.Add up your combined incomes to find out what you have to work with. Don’t worry about who makes more; this is about mutual support.Write all of your expenses down on paper or in a simple spreadsheet. Consider putting expenses in four categories: 1) basic necessities; 2) debts and obligations; 3) less-than-monthly expenses and 4) small luxuries. Make sure Category 4 includes spending money for each of you. No matter how small the amount, it’s the lubrication that makes a budget work.Work together to create a final spending plan. It will take some compromise, but remember, this is a shared dream. By combining your income and creativity, you’re twice as likely to reach your goal.Make a commitment to follow your plan. You’ll discover that the real treat of being in a relationship is realizing your shared dreams.
Durango resident and personal finance coach Matt Kelly owns Momentum: Personal Finance. Visit his website, www.personalfinancecoaching.com.