This post is by our regular contributor, Erin.
So you’re at the stage where you think it might be a good idea to combine finances with your partner.
But you’re not sure how to go about doing it. You just know you’re sick of keeping track of who paid what last, and who’s turn it is next. Or how much you owe each other for rent.
I’ve been there. When my fiance and I first moved in together, he wrote the check for rent, and I transferred my half to his account each month. We took turns buying groceries and paying for dinner out. It got old pretty fast!
When we moved, neither of our banks had locations here, so we decided to get a joint account and start anew. That made the decision pretty easy for us, but for others, it’s not as simple.
Here’s what you need to know before combining finances, and a few options on how you can do it.
Don’t Jump Right In – Talk It Over First
First, combining finances at this point may or may not be right for you as a couple. There’s also no right or wrong way to do this, despite what a lot of people may say. Every relationship has a different dynamic, and you need to find out what works for you.
Please, please have a serious discussion with your partner about this beforehand, and don’t spring it on them. Some people are fine combining finances, and others are reluctant. It all depends on your situation.
Perhaps one of you has been married before, and you’re not sure if you want to share your assets yet. Or maybe one of you was put through the ringer by an ex who used your money irresponsibly in the past.
Whatever the case may be, you need to be sensitive to the fact this is a serious matter. Saying “your money is my money, and my money is your money” has a lot of implications, especially where debt is concerned. We’ve touched upon it in the past, so please read up on how to handle debt in a relationship before committing to merge your finances. And this goes without saying, but at this point, you should both be fully aware of the others financial situation.
When discussing this with your partner, figure out why you want to combine your finances. Is it for convenience? Because it’s a show of commitment? Because you truly love and support each other no matter what? Because you’ve practically been sharing money for years anyway, and just haven’t gotten around to it? Your “why” is important to know.
Once you’ve talked things over with your partner, you’re both ready to figure out the how.
Combine Everything
Of course, one option you can go with is to combine everything. Have a joint savings account and a joint checking account. Maybe a joint money market account, if that’s your thing. You can even go so far as to add each other on your car insurance if it’s cheaper. It’s up to you.
Depending on how much money you’re each bringing to the table, I would hesitate to recommend this route to a couple that isn’t married or hasn’t been together for a decent amount of time.
Obviously, if you’re both broke college grads trying to get established in your careers, combining might not be a huge deal. Sharing a few thousand probably won’t make or break you.
However, if you each have a substantial net worth, make good salaries, and don’t have any debt, you might want to be a bit more protective of your money.
Being married makes it a bit easier to share!
Selectively Combine
This is the option my fiance and I chose. We have a joint checking account, and we each have our own savings accounts (that are linked to the joint account). I also have a completely separate business account. When we moved, I had more money than my fiance did, but since it’s been a year (and during part of that year, I wasn’t earning anything), the joint account is an even pool of our money.
We share all living expenses. The rent, groceries, utilities, cell phone payment, car and renter’s insurance, etc. come out of our joint checking account.
Our student loans used to be paid out of that account as well, but when I opened my business account, I decided to use the funds in there because I wanted to pay extra. Since my income is going into that account, and my fiance’s paycheck is going into the joint account, I figured it was fair. My retirement contributions also come out of my business account, and my fiance has a 401(k) through work.
It doesn’t matter who’s paying for what or who’s account it’s coming from, though. We’ve always been very open about our finances, and we’ve discussed making various purchases with each other from the start. I have a separate account for my business because it’s convenient for tax purposes, but if WE needed money, I wouldn’t hesitate to use it.
Forgo Combining Completely
If, after talking with your partner and reading through these choices, you don’t think you’re ready to manage your money together, that’s okay! Especially if you’re not married. I wouldn’t exactly recommend merging everything if you’ve only been together for a year.
I also hate to say it, but these days, divorce is common. I’m not going to get into a discussion on it, but suffice to say, anything can happen in the future, whether you have a marriage certificate or not.
And sadly, getting divorced can be a financial nightmare. Does that mean you should never merge finances with anyone? Of course not. But it’s always best to be 100% aware of your partner’s financial situation.
It makes me sick to hear stories about one half of a couple hiding something like a gambling addiction, massive debt, all financial account information, etc. Even if your finances are separate, you each deserve to be kept in the loop on some level. You still have to work as a team, and keeping things separate doesn’t mean you should be hiding things.
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As a couple, you need to have a joint game plan for your money, whether it’s kept separate, sort of together, or completely together. It’s important to focus on working as a team and allowing each other to function individually within that team. That means having equal say in things like creating a spending plan!
Balance is key – one partner shouldn’t feel like they have less control or less say because they earn less. If you combine your finances, that ceases to matter. It’s one shared pool, and you need to get past who might be contributing more.
Have you combined finances with your partner? How do you make it work? How long did you wait to combine your money? If you manage things separately, how do you still work as a team?
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I definitely believe in going the joint finance route especially when you’re married. Of course, that means transparency at all times and you both review the budget. I think it would get old real quick keeping up with who pays what and “Are we even?”
Last week, I got an e-mail from the wife of one of the guys I work with. She wanted to know how much it would be to add her and 2 kids onto her husband’s insurance plan because she’s changing jobs and our insurance is better. Anyway, her next question was since he already covers himself and their 2 other kids, could she pay us monthly for the added premiums or could we auto debit her account? She went on to say that if he paid all the premiums that wouldn’t leave him with enough money leftover in his check.
I’ve received e-mails from her before indicating that they are a separate finances household. I personally think it would suck having these conversations about who pays what, especially in a long-term marriage with kids.
LOVE this post! I write about combining finances all the time and speak on shows about it. For young professional women (my main audience) this is a huge issue. A lot of women don’t want to be involved in finances or pay attention — especially because of how young they are and how it doesn’t seem like an immediate issue. I always recommend having specific conversations, money meetings, and making choices together. It’s great if it can stay a positive topic, too.
We combined finances pretty young and pretty quickly, but thankfully it all worked out :)
I recommend making sure you are very open about money and that you have regular money talks.
Mrs Crackin the Whip Plus, the longer you’re married (especially with kids), the more complicated your finances are likely to become. Having to split the rent and other living expenses was annoying – I can’t imagine managing insurance like that!
Financegirl Yes, I definitely think it’s (sadly) more common for women to be left out of the conversation when it comes to money. A lot blindly trust their husbands to take care of it, and that’s not the way to go, even if you’re not as interested in money management. If you ever separate, having the knowledge will be a huge benefit, and if your spouse passes away, having the account information will make things easier.
SenseofCents Having regular “money dates” is a great idea and something I always recommend. You definitely can’t have a one-time chat about this and expect it to go well. Things will come up that require discussion!
We didn’t exactly combine finances, but my husband gave me free rein over his account as soon as we were engaged. Which was very quickly after we started dating.
I was on disability, and my check covered rent. So there wasn’t a lot of worrying about who’d pay for what. Instead, I just logged into his account and paid all the bills out of that. Then I threw the rest at his student loans.
It worked out for us, but for two working people I’m sure it’d be far more difficult.
We didn’t combine finances at all until we were married, but at some point after that we completely combined. I think in the long run, this is the best case scenario for a marriage, but it takes time. Not only do you have to think about finances (a boring enough proposition for most people), but then you have to do paperwork, sign forms, etc.
We didn’t have a joint checking account until my husband switched jobs (and changed his direct deposit), and I wasn’t on the deed to our condo until we had been married for two years (and refinanced).
Moral of the story, it takes a while to combine.
I have seen many different approaches when it comes to merging finances but I think no matter how you manage your money as a couple, the most important thing to have is open and honest communication. Without that as a base level, then you will never truly achieve your financial goals as a team. My hubby and I were not on the same page money wise when we met, but we have always been completely honest with each other and that has always gotten us through everything.
AbigailP We kind of did something similar when we first moved in together. At the time, he wasn’t very gung-ho about budgeting/getting everything in order, so he gave me his account information and let me do a review of his spending. Just goes to show you everyone has different circumstances!
Hannah UnplannedFinance I can imagine it takes a while for most couples, especially if you have a few assets (like a house) you need to be added to. Paperwork is never fun!
blonde_finance Honesty is so important! I don’t think that can be said enough. It’s even more important if you choose to have things separate. That trust needs to be there, and that can be accomplished by communicating.
I think the advantage of combining finances is that you can play to your individual strengths. In many couples, one parter is better than the other when it comes to budgets, bill paying, etc…. Plus, by working together, having the extra set of eyes can make sure nothing slips through the cracks.
The Student Loan Sherpa Agreed! It’s great if you have complementary skills. I’m pretty good at looking at the details, but my fiance likes to look at the bigger picture. We balance each other out in many ways when it comes to managing money, and I’m sure there are plenty of other couples like that.
I haven’t done the combining finances thing yet but I’m sure we will soon enough. For now, we split main expenses like bills, rent, and food down the middle. We also started having weekly budget meetings os we can discuss any financial issues along with our focus and goals for the rest of the week. There’s no secrets and we’re both open about everything but we just separate accounts and it’s working for now.
Chonce It’s working and that’s what’s important! It’s great you’re having weekly budget meetings already, too – that sets a great foundation for whenever you decide to combine.
We combined our finances as soon as we got married. We didn’t move in together beforehand, so this made the decision more clear-cut for us. We figured once we were married, combining would make tracking expenses easier, and also put us more on the same team financially.
Pretend to Be Poor That’s a great way to do it, and yes, I definitely think tracking expenses is easier when you have less accounts!
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Chonce As long as you are both open, that is the most important step!
blonde_finance I was in the same boat, we thought we were on the same page but learned quickly we were in different chapters. Now that I am the breadwinner, I announce every purchase outside of our regular bills. So that when he is working full time again he can follow the open and honest lines of communication I’ve put forth all these years.
Financegirl When I got married I thought my husband would take are of the finances and we’d be just fine. I was wrong and realized that long term financial vision was not his strength. So I stepped in when I became the sole income earner and laid out a plan to get us through law school with the least amount of debt. Managing the finances and securing our financial future is incredibly rewarding.