Income, Spending and Debt for Couples

There are plenty of guides out there that cater to individuals managing wealth and paying off debt. How do we tailor that information for couples, married or not, to best benefit them in their journey to financial security? Below, you’ll find a number of tips couples can utilize to gain better control of their income, spending and debt as team.

Budgeting Classes

For newer couples who may not be well acclimated to earning, budgeting and spending as a team, Budgeting classes are a great building block for the foundation of your financial security. Check local community colleges or municipal offerings from libraries and community centers for financial workshops and budgeting classes. Nonprofit organizations like the National Association for Debt Education and Assistance (N.A.D.E.A.) offer budgeting classes and educational resources for no charge. Budgeting classes will help you identify what bills and expenses you face every month. You may be able to identify areas to reduce expenses and focus that extra amount into paying down debts. The information learned from budgeting classes and financial workshops can greatly help reduce financial stress in relationships.

Leveraging Third Party Income

In 2013 the Consumer Financial Protection Bureau (CFPB) updated regulations to allow a spouse or partner the ability to use their partner’s income in opening lines of credit or requesting credit limit increases “if the applicant has a reasonable expectation of access to it”. Under the former regulations, card issuers typically would only be able to consider the individuals income or assets. This greatly increases accessibility to credit for lesser earning and non-working spouses and partners.

Building Credit Together

Depending on your unique individual income and credit scores, there are a number of ways couples can help each other build credit. Authorized Users: Occasionally, lower earning partners with lower credit scores can be added as authorized users to their partner’s accounts for a quick credit score boost. This will rely on the health of the partner’s account and history moving forward. To gain the most benefit out of being added as an authorized user to an account you’ll want to ensure a decent credit limit, low balance and steady on time payments. Cosigning:  If a partner has less than good credit or poor repayment history, the partner with better credit and payment history may be a good fit to cosign on loans. Partners with poor or non-existing credit stand to pay much more in interest on loans, so make sure the better situated partner is listed first on the loan. Be forewarned, the cosigning partner will be held responsible for their partners debt should it be defaulted on.