How to Combine Finances in a Relationship
When I’m asked, “How should my partner and I combine finances?” I always answer that there isn’t one right way. How a couple combines their finances is a personal decision that may change over time.
There are three main options- completely separate, yours/mine/ours, or combined.
My husband and I have done all three, starting completely separate and slowly combining things over time. Every change we made usually lined up with major changes in our relationship.
Here is what we did, plus further thoughts on how to combine finances for a healthy relationship.
3 ways to manage finances as part of your relationship
Before we get started, there is something to keep in mind: making financial decisions can be difficult because there isn’t always a right answer. And of course, what works for you now, may not be your best option later down the road.
Option 1: A happy partnership with separate finances
When we moved in together, we had only been together a year, but due to him needing to relocate for a new job, it made logistical sense. To protect ourselves, we kept our finances separate and split everything 50/50.
For us, this looked like alternating who paid for big purchases like furniture and monthly rent and tracking all other expenses in an app like Splitwise. The issue is tracking expenses regularly can get old, and after 3 years of this, it began to create problems when one person wasn’t consistent in adding in their costs.
Pros:
Each person's finances are their own, so no added responsibility.
If anything happens to the relationship, nothing except physical items needs to be split.
Cons:
Time-Consuming and inefficient.
It can create inequality.
Tip: Take a hard look at your spending needs vs. your needs as a couple. Coming up with compromises, like alternating who pays for what, can simplify the process.
Option 2: Yours/mine/ours AKA one joint bank account
After three years of keeping things separate, it was getting old, and we decided to open a joint bank account. At the time, we were engaged, and while we could have skipped right to combining our finances fully, we wanted to wait until we’d tied the knot.
So we opened a joint bank account before our marriage and made one of our credit cards a “joint” card by adding the other person as an authorized user. Every month we would add an equal amount to the account to cover the bills.
Pros:
No need for tracking expenses.
Still keeps a firewall between you and your partner's finances.
Cons:
Someone must monitor the account closely to avoid overdraft fees.
Can be difficult to decide how to use the joint account.
Tip: Open the account where one or both of you already have individual accounts so you can quickly and easily move funds to the joint account.
Option 3: Fully combine finances
Finally, after trying the other methods we decided to fully combine our finances after getting married. This meant our direct deposits moved over to our joint account, and all bills were paid from this single account. It wasn't an overnight switch for us. We kept a tiny checking and savings accounts as individuals at first.
Slowly, over the years, these became joint accounts as well. In the beginning, we set a price limit on purchases that didn't need to be discussed. However, over time, this has shifted to an ongoing conversation about upcoming expenses and income.
Pros:
No tracking expenses.
Can foster joint savings/spending goals.
Cons:
No firewall between you and your partner.
If you split, you may need to freeze your credit.
Tip: If you want to keep surprises for each other for gifts, keep a credit card or two separate, but beware, if you share an Amazon account, they may still find your surprises.
Bottom Line: You don’t have to combine finances when you’re in a relationship, but you can
The one commonality between all three models is they require clear and honest communication between the couple. I know talking about relationships, marriage, and finances can feel uncomfortable, but remember that many couples have utilized different options successfully. For us, the Fully Combined method has simplified our lives and allowed us to foster a common set of goals for our future.
Things change, but that can be a good thing when it comes to money management. If you have any questions about your financial situation, don’t hesitate to reach out.