Couplehood is complicated. Not only do you negotiate matters of the heart, but in serious long-term relationships, you also face considerations far more pragmatic. For instance, once you cohabitate, should you and your significant other combine finances as well as furniture?
What does combining finances involve?
Blending two different interior design aesthetics isn't easy, but it's potentially far less complicated than deciding how you're going to handle household bills. Should you open a joint checking account, or should you close your personal accounts and just have one together?
A joint or shared account is one in which you both add money to pay utilities and other living expenses, while also maintaining your own personal savings and checking accounts. Combining finances, on the other hand, means merging your incomes completely into a single account. You'll then have to decide about issues like bill paying, credit card spending, major expenditures, savings goals and paying down debt together as a unit.
Going this route requires a fair amount of open and honest discussion. Combining your finances has some solid pluses but also a few important minuses. Both sides of the equation deserve careful thought.
8 things to consider before you combine finances.
1. How secure you are in your relationship.
For couples taking the plunge, marriage is a sure sign you're committed for the long term. Merging your finances, if you haven't already done so, might make a good deal of sense once it comes time to buying a home or car or making other large financial decisions. Not getting married? Think carefully about how you really feel before you commit not only your heart but also your finances. Untangling either can be a very tricky business, indeed.
2. What you each bring to the account.
If one of you is a high earner but the other is carrying a lot of debt, there can be hesitation on both sides of the equation about combining finances. Do you want to take on your wife's debt, and does she want to risk feeling like she's not contributing enough with her smaller paycheck? The money we make can have a big impact on our sense of self, independence and even worth. Your confidence might be tied to your economic value more than you realize, and ditto your partner, so tread carefully and calmly when first venturing into financial conversations.
3. Budgeting styles.
Are you the couple that spends together or saves together, or are you a little unbalanced? Is one of you a penny pincher and the other a chronic over-spender? Combining finances means you need to make sure you actually have money in that account to pay your bills. If one or even both of you just aren't great at living within your means, you'll need to create a very careful budget and be diligent about sticking to it. Going broke as a couple is an entirely new experience from going broke on your own. And it's caused plenty of relationships to crash and burn or at least become severely cracked.
4. Personal goals.
If you've been saving your money for years, squirreling away tax returns and bonuses, maybe even taking on a weekend job occasionally, you're no doubt quite invested in whatever it is you've been saving for. Maybe it's a trip around the world, maybe it's better photography equipment to grow your portrait business. Whatever your personal goal has been up to now, combining finances may mean compromising your timeline. If your partner is focused on paying down the last of their school debt or suddenly needs a new vehicle, the money you've worked so hard to save may end up with a healthy chunk taken out of it. You and your partner need to talk about not only your spending habits but also your saving styles and goals before you can decide if combining finances is the right decision for you and if now is the right time to do it.
5. Couple goals.
Like so many other aspects of a relationship, when it comes to goals there's yours, there's mine and then there's ours. Do you two plan to take a dream cruise, buy a house or start a family in the next five years? Have you even thought about what you want for next year? Everything in your lives might be holding steady right now, but at some point, you'll need or want to change your living or work situations.
Discuss what goals are someday dreams, and which you want to start actively saving for and working toward now. This could be as simple as each of you paying down your debt before combining finances. Whatever the goal, you should at least discuss creating an actionable money plan for you as a couple to follow.
6. Who will pay the bills?
Will you both have a checkbook or bank card for the account? Or is one person going to be in charge of paying bills and keeping the account in good standing? Even if you both have daily access to the money, someone is probably going to end up playing accountant and making sure things are paid on time. How comfortable are you with the idea of cracking that whip — or having that whip cracked over you?
Again, matters of finance can be as sticky as those matters of the heart. Treat the topic of combining finances with as much care as you have the rest of your relationship.
7. Your ability to communicate.
Because you'll need to have financial conversations throughout the course of your relationship. Can your relationship actually handle that, or do you end up arguing about money more often than not? Not being able to have calm, constructive conversations is a sign you may not be ready to combine finances until you improve your ability to communicate.
8. How you feel about sharing.
The most important thing to consider about combining finances? If you really want to share everything you make. You work hard for your money. And while creating a shared account for handling shared expenses just makes good sense, maybe you don't like the idea of putting every last penny you worked for into that one account. That's a valid feeling to have. Wanting to maintain your own finances doesn't mean you don't love and trust your partner. It means you want to retain a degree independence and accountability. The things you buy for yourself will come out of your own pocket. And perhaps you'd prefer if your partner did the same.
Should you combine finances?
Yes, no or maybe later are all reasonable conclusions to reach when deciding whether or not to combine finances with your partner. The topic deserves careful thought and a lot of discussion. Matters of income, debt, personal goals and the need to pay your own way (or not) are all elements that need to be addressed.
While it makes sense to split the grocery bill and go in together on the rent, handing over your entire paycheck has a different flavor. Once upon a time, not so very long ago, most women didn't even have the option of working outside the home, let alone having a say in a couple's finances. Many of our grandmothers and even our mothers worked hard to secure us the independence we can achieve for ourselves today. Honoring that struggle may be a large part of why you want to maintain your own accounts.
For others — men and women alike — combining finances is a sign of commitment to the relationship and trust in your partner. If you both feel that way, then for you that's exactly what it is: a sign of personal investment. If one of you doesn't agree? Keep talking until you've both expressed why you feel the way you do and where those emotions are coming from.
You'll need to come to a conclusion that suits both of you. Don't feel pressured to commit yourself and your finances to something that doesn't feel right. That's the only wrong answer here: saying yes or no to combining finances with your partner when doing so goes against how you really feel. It's your money. Make sure the decision you commit to is right for you.