Combining Finances

Combine finances as a couple or keep things separate?

When you’re in a relationship, there will come a point where your expenses will start overlapping, and you’ll have to decide to keep your finances separate or combine them. This might be when you get married or when you move in with each other. But how do you know which method is right for you and your partner?

There’s no right answer to that question. It depends on what you are comfortable with. Today I’m going to lay out the pros and cons of each option so you can make the decision based on your situation.

How We Manage Money In Our Relationship

I’m in the ‘separate finances’ camp…at least for now. I’ve been with the bf for over ten years, but we’ve never taken the jump to going joint. Honestly, I don’t really have a good reason why not. We bought a house together (7 years ago), have pets together, and while we may not yet be married, we are pretty darn committed.

Our mortgage is in both our names, but other than that we split most of the bills and keep our bank accounts, investments and credit cards separate. I think it’s been easier to keep things status quo. Setting up a new bank account and changing over all the automated payments is a pain. One that I would be responsible for, and let’s face it, I’m lazy.

There is also a part of me that likes being able to spend my money on what I want with no questions asked. The bf is pretty easy going, but there may be a slight Sephora addiction I’d be answering for…

Mine vs Yours

Notice how I said my money there? I caught that too. Over our ten years together, we have been in all sorts of situations. I was in school, and he was working, he was in school, and I was working, we were both working, he lost a job, I changed jobs, and now we’re both working again. Even though we’ve had each other’s backs through all of that, there is still a part of me that is selfish (blame my only child upbringing or, you know, just being a human). If we lump all of our money together into one account it will feel like ‘ours’, and it will be harder for me to justify the purchases I want to make.

I’m not naming any names, but one of us has a salt-water fish tank hobby that the other one does not want to know the real cost of. That person doesn’t want to know that a $70 fish just decided to commit suicide by jumping out of the tank and getting eaten by a cat. #relationshipgoals

It’s not always as easy as flipping a magic switch and having effortless joint finances…it’s all about compromise folks! My issues aside, let’s get into the nitty-gritty of why you may (or may not) want to combine finances with your spouse.

The Good

Simplicity

This is by far the most significant factor. One account where all your paycheques are deposited, and all your bills are paid from; no transferring money back and forth in an attempt to keep things equal. In our not so simple system, we have divided up our bills into semi-equal amounts, and each person is in charge of their portion. It’s not perfect, but it’s close enough that it works for us.

An important note is that our incomes are in the same ballpark. If you have one partner significantly out-earning the other, then you need to decide if you still split bills equally or if the higher earner takes on a greater share.

Cheaper

If you still pay banking fees you could potentially cut your fees in half by using a shared account. Sidenote: you should look into no-fee banking options. You’re likely also sending money back and forth between each other; we do this a lot. Email money transfers can also cost upwards of $1.50 each time, and that expense would be eliminated with a joint account.

There’s also chance that the bank will offer you a better interest rate if combining your accounts leads to carrying a larger balance. I’m not one to keep a large balance in my bank account, but many people do, and a higher interest rate will mean more money in your pocket.

Communication

For better or for worse, you will now be able to see where, when, and how much the other is spending and that’s likely to spur some conversation. I don’t think this is a bad thing, but it’s a good idea to have a detailed budget before you get started to avoid unwanted surprises.

Having to run purchases past your partner before swiping the credit card might feel like a loss of independence, but it can also save you money. Having an added level of justification will ensure you’re only making purchases you are comfortable with. If you can’t justify it to your partner then there’s a good chance it’s going to be one you regret.

The Bad

If your incomes aren’t in the same range, the higher earner may feel like they are taking on more of the burden for paying bills and the lower earner might feel guilty spending money they didn’t bring in. I am certainly not above this. We’ve been back and forth enough that I think we’re on even terms, but there have been times I’ve been the money maker and have felt cranky when the bf buys something I don’t consider a necessity. It’s tough to set aside your feelings when it comes to money, hence why it’s one of the biggest stressors in relationships.

Less privacy

Sure, we should feel like we can be open with our partners but sometimes you don’t want them knowing where every penny goes. And how are you supposed to surprise them on their birthday? Really though, if you’re hiding what you spend money on, there’s likely a bigger problem.

The downside of having better communication is the lack of privacy. As I said above, this isn’t a bad thing. But it can take some time to adjust to having it all out in the open.

Division of Labour

When finances are managed jointly, there’s usually one person who takes the lead. That can mean more work for one person and less for the other. Ideally, both of you will be involved in the day to day work of paying bills and setting aside savings, but we all know that’s not how it works. How are you going to split it up and keep things fair?

If one of you is out of the loop, then this can be a problem if something happens to the household money manager. I’ve seen this happen before. A spouse passes away suddenly, and the survivor has no idea where to start. Not only are you dealing with grief, you have the added stress of not knowing how to pay your bills. If you do go joint, make sure you both parties stay in the loop and know what’s up. Another thing is to ensure you are both listed on any bills (utilities, cable, etc.). The last thing you want is for a company to refuse you information if your spouse passes away unexpectedly.

Budgeting Complexity

Two people mean twice the bills and twice the savings deposits. If you’ve only ever kept an individual budget, then it’s going to take on a new level of complexity. Before combining you should sit down and create a joint budget, so you’re on the same page.

The Ugly

If one of the joint account holders gets into trouble with creditors, then your shared assets could take a hit. Up to 50% of a joint account can be seized to cover unpaid debts.

Both parties on a joint account can give instructions on the account. If the relationship ends in a blaze of fury, one person could potentially clean out all the assets in the account. Yes, you could go back and sue them, but then you’d find yourself in a lengthy and expensive court battle. The hope is that you’ll never find yourself in this type of situation, but if things start to go south then make sure you take precautions.

JTWROS vs TIC

When setting up a joint account, you have two options for how the money will be treated if one of the holders passes away. The first option is ‘Joint Tenancy with Rights of Survivorship’. This means if one of the account holders dies all assets in the account will be passed directly to the other holder. The benefit of that is that the funds don’t have to go through the estate. The other option is ‘Tenancy in Common’. This means that each person owns a specific portion of the account. If there is a death, you would only get your portion, and the deceased’s portion would go through their estate. Either way works, but it is something to think about if you’re taking the plunge towards joint finances.

How do you guys feel about combining finances? Do you prefer to keep things separate or like the simplicity of a joint account?

Combine finances as a couple or keep things separate?

This post was proofread by Grammarly.

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4 comments

  1. My husband and I are joint on everything except credit cards. The biggest challenge we have is surprising each other with gifts. It's hard when both your pay cheques go into the same account. It works for us because we are both finance people and are in the loop with our finances (more me than him though), but you make a good point, if your relationships is where one person manages the finances and the other one does not, things can go south when something happens to the 'nerd' in the relationship.
    It's been quite the journey for us in the area of joint accounts, been together 9years, married for 3 and during the 3 years that's when we joined accounts. Great post.

  2. Sounds like it's working for you guys and that's what matters! I get you on the gifting, becomes hard enough to come up with surprises after being together for so long.

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