A Guide to Combining Your Finances with Your Partner’s
Figuring out a strategy for managing your own finances can be difficult—and managing finances with a partner can double that difficulty! Although most married couples pool their finances, the share of all couples—whether married or cohabitating—that pools their finances is dwindling, with Millennials more likely to hold separate bank accounts than their generational predecessors. In fact, according to a study from Bank of America, one in five Millennials doesn’t even know how much their partner makes!
This change is at least partially due to the trend of Millennials marrying later in life. Married couples are more likely than unmarried, cohabitating couples to combine their finances, so those Millennials who get married after living together for a while feel that combining their finances isn’t necessary when their relationship norms around cash have already been established pre-nuptials.
Additionally, some couples feel that they don’t need to discuss every purchase they make with their partner; they see maintaining at least some financial independence as part of a strategy to minimize conflict over spending in their relationship. (Do you really need to have a budget discussion with your partner every time you decide to get a haircut or grab lunch with a friend?)
Some worry about merging finances with a partner who has a significant amount of debt, as boundaries could blur and tensions could build around who is responsible for repaying the balance. (It’s important to note that debt acquired before marriage is owned solely by the borrower, not their spouse—but some couples agree to help each other pay down their debts.) Other couples worry that combining finances could contribute to antiquated gender roles around money and labor in their relationship.
Low-income couples in particular are more likely to keep separate accounts, valuing having sole access to their own earnings. But interestingly enough, a 2022 Cornell study found that low-income couples in the U.S. are more likely to be satisfied in their relationships when they combine accounts. In fact, the study says, married and cohabitating couples at all income levels are more likely to find a deeper sense of harmony and commitment in their relationship if they consolidate their finances than couples who keep their accounts separate.
Though the Cornell researchers believe combining finances causes people to have a stronger sense of interdependence and a merging of financial and relationship goals, this correlation could also be explained by the fact that couples who decide to combine their finances already have the trust and relationship satisfaction needed to make a joint financial situation work before they take the leap.
Every couple thinking about cohabitating or getting married needs to have a conversation about finances—and doing a complete survey of your finances together can be a huge deal. Much of the tension in this conversation comes down to how to draw the line between the couple as a solitary unit and the couple as two individuals.
If you are considering consolidating your finances with a spouse or cohabitating partner, here are some useful strategies that could help you manage your finances together—whether you merge your accounts or not.
While a lifetime of writing IOUs and Venmo-ing your partner might be the approach that requires the most record keeping, it can certainly work if you and your partner are strong communicators and feel confident about discerning between shared and separate expenses.
Couples who take this approach might be able to skip a lot of the IOUs by agreeing to cover specific expenses in a way that evens out. In an example scenario, one person might cover all utilities and takeout orders a few nights each month, and the other covers subscription services and groceries. Both cover their own personal expenses like car payments, and they split their rent or mortgage payments.
This tactic might work best for a couple that is still on the fence about combining their finances.
Completely combined accounts
Completely combining accounts is most common among married couples and is considered by some to be the easiest way to manage your finances together. Putting both of your income streams into one bucket and treating funds with a “what’s mine is yours” approach completely eliminates the need to delineate exactly what counts as a shared expense!
In partnerships where one person is the clear breadwinner and the other person either doesn’t participate in the workforce or otherwise has significantly less income, this approach is likely the best option.
Of course, this financial strategy is waning in popularity because, while it was once very common for households to operate on a single income, more and more couples rely on two incomes to get by. Plus, while completely combining finances has some major pros, it also has a few pretty big cons!
- Pooling resources allows you to share all expenses and save money together toward common goals, turning “yours” and “mine” into “ours”
- Record-keeping is simplified—meaning budgeting becomes a lot easier
- In the event of you or your partner’s death, the surviving account holder retains access to the account
- Because you and your partner share a bank statement, you have very little financial privacy
- If your partner mismanages finances or borrows too much money, this could put a serious dent in your savings or harm your credit score; additionally, debt acquired during marriage belongs to both partners in states with community property laws
- Creditors can come after funds in a shared bank account if your partner has a credit account go into collections
- In the event of a breakup, one partner could drain your joint account of money without your permission
While combining your finances entirely might allow you to skip the difficult conversations about how much you and your partner respectively should be contributing to your household, there is still a lot to consider before making this jump. Sharing accounts requires complete trust in a partner, plus a relative amount of financial stability.
One increasingly popular way around many of these issues, at least in the case of engagement and marriage, is signing a prenuptial agreement. A recent survey by Harris Poll found that 15% of Americans who are married or engaged signed a prenup, with 40% of those people under the age of 34. This kind of agreement can allow a couple to enforce a rule that property and debt that an individual acquires before—or even during—their marriage will remain theirs in the case of a divorce.
Partially combining your finances
If you want to try to strike a balance between maintaining your financial independence and working with your partner to reach certain goals together, partially combining your finances using joint banking and/or credit accounts is a great option.
Taking a hybrid approach to managing your finances with a partner essentially exists in three components:
- Your personal account
- Your partner’s personal account
- A joint account you both contribute to
The joint account can be used to pay for shared expenses, like rent, utilities, car payments, groceries, and so on.
In this type of scenario, you might also have both joint and individual savings accounts, with the individual savings accounts left for things like buying that expensive pair of shoes you want, and the joint savings used for things like planning vacations, buying a house, having a wedding, and other major money goals you’ll both want to contribute to.
If you and your partner have similar incomes, then one simple way to partially combine your finances is to contribute equal dollar amounts to your joint checking and savings accounts with each paycheck. From there, the hardest part of combining your finances is figuring out a budget together and clearly delineating what counts as a joint expense or a personal expense.
Splitting finances proportionally
One of the most common hybrid approaches is to split your resources proportionally. Think about it—if you make a lot more or a lot less than your partner, contributing equal dollar amounts to your joint account would leave one of you without much left for discretionary spending each month and the other with a lot more cash to spend. This kind of financial iniquity in a relationship could cause a lot of tension!
However, if you split your contributions proportionally by both putting, for example, 70% of your monthly income into your joint checking/savings accounts for shared expenses, you’ll both still have a decent chunk of your income left in your individual accounts for spending and saving at your discretion.
Managing debt together
If you and your partner want to start combining your finances but one of you has unsecured debt that’s preventing you from taking that step, enrolling in JG Wentworth’s Debt Resolution Program now could put you on track toward successfully consolidating your finances in the future with less debt to weigh you down.
We can help you lower your overall balance and pay it off in as little as 24-48 months. If this sounds like something that could help you and your partner, give us a call today at (888) 505-1794 to hear about your debt relief options. Our team can answer all your questions about the program and help you decide if this is the right choice for getting you or your partner’s finances back on track!
- Eickmeyer, K. J., Manning, W. D., & Brown, S. L. (2019). What's Mine is ours? income pooling in American families. Journal of Marriage and Family, 81(4), 968–978. https://doi.org/10.1111/jomf.12565
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