Should Couples Combine Finances?

In the past, couples often combined finances, usually after marriage. Now, both partners in a couple often have sources of income and investments and the question of whether couples should combine finances is more complex. Partners often choose to manage their money in other ways that are best suited to their relationship. 

Should you combine finances as a couple? And if so, what’s the best way to do it? Here are some options to consider when you’re thinking about combining finances as a couple, and some budgeting tips so you can get your financial relationship off on the right track.

Options for Combining Finances as a Couple

However you decide to manage your money individually, you’ll likely need to think about how to manage joint expenses such as rent or mortgage, childcare and education, bills and utilities and other costs that are part of your life together. Here are a few ways that couples choose to manage those financial matters and ways that couples combine finances.

1. Combine Everything

In this method both partners put their money into the same account. Often, one person adds the other to his or her bank account(s), or a couple opens a new account together. Usually, both partners would become legally responsible for the account, and both would have full access to withdraw, deposit and view accounts. Joint bank accounts can simplify money management since funds go into and out of one place. All spending can be easily tracked by both people. On the other hand, there can be pressure to “justify” purchases made from a joint account — and that’s something to consider when you’re thinking about combining finances as a couple.

2. Keep Finances Separate

Some couples prefer separating their finances, with each partner retaining access to and full control of their own money, assets and investments. Couples might have many reasons for choosing not to combine finances. For instance, a couple that gets married later in life is often made up of two people with well-established finances, habits and personal preferences. Or perhaps there are simply exceptional circumstances for one or both spouses. In these cases, determine how you’ll split monthly expenses (more on that below) and set up a system to keep one partner from frequently “owing” the other. Bill-paying and banking apps can automate transfers making it easy to track spending. If you need help establishing a budget, there’s an app for that.

3. Maintain Joint and Individual Accounts

One popular method for combining finances while maintaining some independence is a hybrid approach. Couples decide to keep a joint bank account for shared expenses and separate accounts for individual purchases. Each person transfers money to the joint account each month to pay bills or add to household savings, but then they largely manage their own assets. With this setup, joint expenses are easy to track and pay. Each person maintains control over their own spending money.

Budgeting as a Couple  

After you and your partner agree on a method for combining finances as a couple, it’s wise to set a budget to keep you on track. These budgeting tips will help get you started.

Divide Expenses

Start your budget discussion by outlining all shared expenses: rent, electricity, gas, groceries, internet and cable, healthcare, joint loan payments, childcare and education and so on. Next, determine how to divvy up any debt incurred before the relationship began. Do you pay your student loan payments alone or do you split the payment? What about credit card debt?

Even Things Out

In many relationships, salaries vary. If this is the case, splitting bills down the middle may not make sense. To keep things fair, divide expenses like rent or mortgage and household utilities by percentage. Figure out what proportion of the expenses each partner should pay based on income. If one spouse makes $75,000 and the other makes $25,000, you may want to split the $1,000 rent payment as $750 and $250, respectively. Make sure to discuss this strategy ahead of time to make sure one person won’t feel overly burdened by taking a greater financial load or blindsided by differing expectations.

Talk It Out

In most relationships with at least some shared finances, one person acts as the “money manager.” That doesn’t mean the other partner should stay out of the equation. Talk regularly to ensure that you are both on the same page. Many couples find that it’s helpful to schedule regular times to discuss the financial state of your household, plan for the future, discuss your budget and get on the same page.

Consider Your Credit

Your credit score won’t be impacted by marriage, since your credit history includes only information reported in your name. If you choose to change your name through marriage, your new history going forward will be added to your existing credit report.

But what if your partner comes into the marriage after having experienced bankruptcy or incurred outstanding debt? These factors will impact your score only if you’re added as a joint account holder on unhealthy accounts. On the other hand, adding your spouse as a joint account holder to an established, healthy account could help their credit score. This can come in handy if you plan on making a large purchase, like a vehicle or home, and need both incomes and credit histories to qualify.

What About Debt Incurred During Marriage?

Whether or not you choose to combine your finances, you may share legal ownership of savings and debts accrued by your spouse if you live in a community property state: Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington or Wisconsin. In Alaska, South Dakota or Tennessee, you can opt in to a community-property system. With some exceptions, the money spouses earn, debts you accrue and things you purchase are considered assets and/or liabilities for both people. If one spouse takes out a loan for which the other did not co-sign, the partner will still share responsibility for it.

Get Your Marriage Off to a Good Start

Discussing your financial future may not be an easy conversation to have, but it’s necessary.  Your local Farm Bureau agent or advisor is here to help the conversation get off on the right foot with budgeting tips and advice, as well as a host of financial services designed to help your house run smoothly.