Should We Combine Our Finances?

by | Jul 29, 2016 | Money Tips | 0 comments

Couples often ask “Should we combine our finances? If so, when?” This article will help you both make the right choice for your situation.

There are many benefits to managing your finances with your significant other, but there are a number of scenarios where combining your money together just doesn’t make sense.

Married Couples

We’ll start easy…married couples. I would highly recommend married couples manage their money together.

Money can be one of the biggest causes of stress in a relationship, but being on the same page with your partner can help eliminate most of that stress. If you’re about to start your marriage, or even if you’re a veteran, it’s important to develop a financial plan with your spouse. This is much more than just a budget.

Think about the goals you have as a couple. Is there a trip you’ve always wanted to take? Maybe you want to have the honeymoon you never had. Do you have debt you’re tired of paying off? Do you want to start your own business, or retire early? These goals will build the foundation of your financial plan and will be your motivation to work together.

By working together on common goals, it starts to make more sense why a joint bank account is appropriate. In a strong marriage, there should be no feeling of hiding or secrets, and keeping your money together in the same place provides some level of accountability to each other.

It’s also just as important to build personal spending money into your plan. My wife and I both have a certain amount of “free money” we can spend or save each month. This cuts down on the need for either of us to justify spending money on our own hobbies or time out.

Once you have your plan thought out, head on down to your bank of choice, and open up a joint checking account together! Be sure you can both can log-in to online banking so you can review and track your account balance and spending.

Make sure you and your spouse take time on a regular basis to review your plan progress. Working together on your finances will bring you much closer as a couple!

Dating

For dating couples, whether or not to combine finances can be a bit more tricky. Unless you plan on staying in a life-long dating relationship, I would not recommend managing money together.

Use this time while dating to learn each other’s financial habits. Does one of you tend to spend impulsively or save like crazy? These can be complicated and awkward discussions, but it’s important to develop a plan to deal with any differences before attempting to share money together.

When we were dating, my wife and I both had similar spending habits. We both tended to spend more than we earned, which sounds like a disaster right? We actually used this to our benefit and became each other’s support system while budgeting and paying off our own debts.

In a new relationship, we tend to be a bit naive thinking our relationships will always last forever. Unfortunately, that’s not usually the case. Break-ups are made much more complicated when shared money is involved. You can always save for things together, but best to keep your money to yourself for now.

Scenarios with the most potential for harm is when credit or loans are shared while dating. It can be very tempting to open a credit card together or co-sign for your partners loan. Opening a joint card will affect each person’s credit score. Co-signing for anyone is generally not a great idea, period.

While having a joint card might help build credit together as a couple, a nasty split could have devastating consequences. If your partner is irresponsible or angry and decides to make large purchases or skip payments, you’re just as legally liable for that debt. Married couples aren’t immune from this scenario either, so it’s important to consider your options first.

Engaged Couples

Engagement is an exciting, and stressful, time for couples. I remember all the exhaustive days spent “venue shopping,” setting the guest list, and I may or may not have gone to a bridal expo.

This is also a good time for couples to practice working together on finances. While my wife and I didn’t combine all our finances, we decided to open up one joint account for wedding expenses.

You see, we both had our own struggles with debt, and we decided that we were not willing to finance one penny of our wedding or honeymoon. To achieve that goal, we needed to work as a team and make some tough decisions. For example, pushing out our wedding date to a Friday in November meant cheaper rates, more time to save, and less humidity too!

We estimated how much our wedding and honeymoon would cost us and how much we
would need to save each month. We made payments to ourselves by depositing a set amount each month into our joint checking account. This was a great practice for how we would end up managing all our finances after we married.

I suggest engaged couples do something similar. Use this opportunity to set a financial goal and work at it together as a team.

Follow Your Gut

Whether you’re dating, engaged, or married, it’s important to follow your instincts. If something doesn’t feel right to you, do your research, talk to a friend, a professional, or your partner.

Don’t feel any pressure to merge your money while you’re still dating, but learn each other’s spending habits. Use your engagement to practice managing some of your money together towards a common goal. When you’re married, develop a plan, pool your resources, and work together as a team.

Are you managing money together in your current relationship? What has and hasn’t worked for you? Let us know in the comments!

About the Author

After graduating from Purdue University in 2009 with a pilot’s license and a degree in Aviation, Dan Kellermeyer had over $100,000 in student loans and faced a virtually non-existent job market for new pilots. Today, Dan is free of consumer debt and is passionate about helping others finding the best way out of debt and planning for the future.

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