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Should Couples Combine Their Personal Finances?

Find out the pros and cons of different ways to manage coupled finances.

By
Laura Adams, MBA
August 2, 2010
Episode #184

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Whether you should merge your personal finances with another person is an important decision. Mingling money in joint accounts affects both of your credit scores and also has far-reaching legal consequences. When it comes to blending personal finances, there are three basic approaches that couples can take:

  1. You can jump into a complete financial union

  2. You can maintain complete financial independence

  3. You can settle somewhere in between.

In this post we’ll consider some of the pros and cons of each of those options.

Should Couples Combine Their Money?

If you’re married or are in an equally serious relationship that you’re confident will stand the test of time, I recommend that you merge your finances 100%. That’s probably because I’m married and the merger setup has worked really well for us. I believe that uniting money and having joint bank and credit accounts is the best way to work as a team to overcome challenges and to accomplish your shared long-term financial goals.

When you’re in a committed relationship, all financial decisions should be discussed and shared equally. It doesn’t matter if only one person works, or if one person earns much more than the other. You should decide as a couple how to budget, how much to save, whether to buy a home, and so on. Uniting everything also makes managing money easier because you have fewer accounts and administrative tasks to handle.

Those are wonderful pros, but what about the cons? The downside to tying a financial knot with someone is that untwisting it can be a real nightmare if the relationship ends. Joint mortgages, credit cards, and bank accounts can be very difficult to separate even with a formal court-ordered divorce decree. Another problem is that some couples may never agree on certain issues, like creating a spending plan or on how much debt they should carry. Maybe one person is a die-hard saver and the other is a wild-eyed spender—you see where I’m going.

How a Couple Can Split Up Their Finances 

Differences in your financial personalities should ideally be rectified by agreeing on a budget, so priorities—such as housing, food, savings, and debt payments—always come first. But if you know your partner well enough to know that your financial philosophies will never jive, it may be wise to split up your finances—or at least a portion of them. One option is to have joint checking and savings accounts but to also have individual accounts. It’s a “yours, mine, and ours” approach where one or both people contribute to the family pool, but each maintains a separate account to manage themselves, without the other person looking over their shoulder.

If you’ve managed your finances for years, you may feel more comfortable hanging on to some amount of financial autonomy.

As I mentioned, this isn’t the tactic that I take, but it certainly could help keep the peace if one person dominates the finances and doesn’t give the partner any leeway. This setup tends to be common with people who come together after being on their own for a while. If you’ve managed your finances for years, you may feel more comfortable hanging on to some amount of financial autonomy. The downside to this approach is that there’s more bookkeeping to do. You need to establish what flat amount or percentage is equitable for each person to contribute to the joint kitty and which expenses should be shared.

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