Insights & advice
Should couples combine finances?
May 2023 – 5 min read
It’s important for couples to talk about money, and those discussions may look different depending on what type of couple you are and your goals.
Talking about finances as a couple can bring you together with a stronger bond and better preparedness for the future.
An intro to combining finances
Whether you should combine finances is a personal decision that depends on your individual circumstances and preferences. Some couples choose to combine finances, while others prefer to keep finances separate. Combining finances can have some benefits, such as making it easier to manage household expenses and planning for long-term financial goals.
It can also help build a sense of teamwork and shared responsibility within the relationship. However, combining finances can also have some drawbacks. Ultimately, whether you decide to combine finances will depend on your unique circumstances, values, and goals.
Pros and cons of combining finances
Shared financial goals
If both partners have shared financial goals, such as saving for a down payment on a house, renovations, starting a family, or paying off debt, combining finances can make it easier to work towards those goals as a team.
Transparency and trust
Combining finances can help promote transparency and trust in a relationship. It can help both partners to have a clear picture of their overall financial situation, including income, expenses, and debt.
Sometimes you can simplify the process of paying bills and managing household expenses by combining finances. It can also help to avoid arguments or misunderstandings about who is responsible for paying which bills.
When should couples NOT combine their finances?
While there are benefits to combining finances in a relationship, there are also situations where it might be better for a couple to keep their finances separate. Here are some scenarios where couples may not want to combine their finances:
Different financial goals
Keep finances separate and contribute to each goal individually if 1 partner has different goals. Doing this can still allow you to reach the goal, it just may take a little more time.
One partner has significant debt or financial issues
Separate finances if 1 partner has significant debt or financial issues, as combining them could make it difficult to manage the debt and negatively impact credit scores. However, there are certain instances, like combining a debt with a mortgage for a lower interest rate, which can be beneficial.
Different spending habits
If partners have different spending habits, it may be better to keep finances separate. Combining finances could lead to conflict if 1 partner feels like the other is spending too much money on things they don't agree with.
Keeping finances separate requires trust and transparency, and if 1 partner is not comfortable, it can lead to conflict.
When should you consider combining finances?
Combining finances as a couple can be a complex decision and may not be the best choice for everyone. However, here are some types of couples who may benefit from combining their finances:
In most cases, married couples may find it beneficial to combine their finances. Combining finances can simplify money management, help in tax planning, and ensure both partners contribute equally to shared expenses and financial goals.
Long-term committed couples
Couples in long-term committed relationships who share household expenses and financial goals may also find it beneficial to combine their finances. This can help in managing shared expenses, planning, and building a joint financial foundation.
Couples with joint financial goals
If both partners share the same financial goals, such as saving for a down payment on a house or planning for retirement, combining finances can help you work together towards achieving those goals.
Couples with unequal incomes
If 1 partner earns significantly more than the other, combining finances can help balance out financial responsibilities and allow for more equal contributions to shared expenses. It's important for both partners to have a clear understanding of their financial situation and be comfortable with the arrangement.
In addition, it’s also generally best to leave emotions out of the financial decision-making process because emotions can cloud judgment and lead to irrational decisions that may not be in your best long-term interest.
Tips for combining finances
By taking the following strategies into account, couples can combine their finances successfully and work towards achieving their shared financial goals:
Create a budget
Creating a budget is an effective way to track income and expenses and ensure that both partners are on the same page about spending priorities. Couples should discuss and agree on how they will allocate their money, including necessities, discretionary spending, and savings.
Decide on joint or separate accounts
Spouses should decide whether they want to have joint accounts or keep their finances separate. Joint accounts can simplify bill payments and make it easier to track expenses, but some couples may prefer to keep their finances separate to maintain some independence. Some couples, however, may find that having a joint account in which they pay all household expenses is a good option for them. A combination of these strategies is also an option.
Agree on a system for managing the bills
Determining who will be responsible for paying bills, how they will be paid, and when they will be paid can help avoid missed payments, late fees, and other financial headaches.
Discuss the financial responsibilities
Talk about how you will divide the financial responsibilities as a team, such as managing investments, handling taxes, and making financial decisions. This can help ensure that both partners are involved and feel empowered in the financial decision-making process.
In some relationships, one person may be in control of the finances, but it’s still important for the other person to be aware of the financial situation as a couple.
In conclusion, whether you should combine finances with your partner ultimately depends on your individual circumstances, preferences, and goals. While joint finances can promote transparency, trust, and better financial management, it can also lead to conflicts, power imbalances, and financial dependence.
Therefore, you should have an open and honest conversation about both of your financial habits, values, and expectations early in the relationship and work together to find a system that works best for you.
How you’ll approach discussions about combining your finances with your partner will ultimately depend on your individual personalities and dynamic as a couple.
An advisor can act as an impartial third party to help you both approach discussions about your combining your finances.
The information provided is accurate to the best of our knowledge as of the date of publication. This information is general in nature, and is intended for educational purposes only.