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Considerations When Combining Finances

Considerations When Combining Finances

“Should we combine our finances??”  It doesn’t matter your age, gender, sex, or tax bracket.  This is a big, important question any time you are considering a partnership.

There are several ways to approach the question of combining finances.  Here I’ll describe the two I see most often.  It’s important to note that I have seen couples achieve their goals and have a wonderful, healthy relationship using either way.  In other words, the method you choose isn’t the most important thing.  The most important thing is the commitment and communication of both partners.  (Hmm kind of sounds like marriage itself, doesn’t it?) 

One Joint Account: All sources of income go in one place (a joint bank account), and all expenses go out from that one place. 

Works best for: couples with one income source (i.e., one is the breadwinner, the other is the household bookkeeper) or with couples where one partner is really comfortable with budgeting and finance, while the other is terrified of it.  There’s nothing wrong with this.  Learning to play to your strengths is an important part of marriage/partnership.  

Pros: complete transparency.  Both partners can see what goes in and out, down to the penny.  Some couples say this creates trust.  

Cons: some couples say this creates an atmosphere of judgment and resentment instead because seeing where every penny goes causes fights over what money “should” be spent on.  If that’s the case for you, consider the next option:

Yours, Mine, and Ours Accounts: Each partner has their own accounts (yours / mine), and then there is also one joint account (ours) for shared finances.

This requires a conversation to set up (which is a good thing!).  Couples need to agree upon what expenses are to be “shared” (ie, the house payment, utilities, grocery store runs, eating out?) and what is not shared (ie, clothing, haircuts, hobbies, personal gifts?).  They also need to agree upon how much each person contributes to the account each month.  For example, 50% of each person’s paycheck?  Or a set dollar amount?  Does one person make significantly more than the other, and does this mean that person puts in more?  Again, there’s not a right or wrong answer here.  Whatever answer you come up with needs to make sense and feel fair to both.    

Works best for: couples where both partners are relatively comfortable with managing money; or couples with some past history (ie divorce) that makes separate accounts feel more comfortable.

Pros: some couples say this type of working together as a team is preferable because it helps keep them focused on the “big picture” things in their financial life, rather than fighting over small financial items.  It can also help each partner maintain a sense of autonomy and control while maintaining a sense of fairness in the shared account. 

Cons: Some couples say this makes them feel too separated.  Based on your past experiences with money, and your personal money beliefs, this method could feel “weird” for you.  Or, one partner may worry that the other partner may not be managing their money well.  Whether or not this is the really the case, it could put stress on the relationship.   

The Big Picture

The goal when combining finances is not to be perfect with your money (either of you!).  Rather, it is to come up with a system that works for you: one that feels fair and honest, and that each partner can willingly commit to.  You achieve this through communication

A financial planning colleague, Hannah Moore, CFP ®, recently commented:  

“Communicating about money… should be a top priority in your relationship. (Not communicating is also one of the biggest mistakes newlyweds make with their finances.)”  I think she is so right in this!  (And you can read her article about it here)

Talking about money with your honey may not be the most romantic thing that you do, but nonetheless it may be one of the most important – and ultimately rewarding – things that you do together as a couple.  Bonus points for communicating in a supportive, honest way!  If you’re wondering how that is even possible, check out my post on tips on how to talk to your spouse about money, here.

Money conversations are not easy!  But they can be another opportunity to learn about each other, talk about your goals and dreams, and work together as a couple.  Aren’t these the keys to a successful partnership?  Perhaps – even the keys to a successful and happy life. 

You can do it!