Do I Need to Combine Finances with My Significant Other?
posted on September 10, 2018 | by Heather Bien
Here you are – you and your significant other are getting serious, perhaps talking about moving in together, getting engaged, maybe even buying a house. It’s an exciting and anxious time! And it’s not 1950 anymore. We’re not wide-eyed recent graduates getting married without a penny to our name. Now, we’re heading into relationships in our thirties with careers we’ve worked hard to establish, healthy emergency funds, retirement accounts, and, yes, areas we like to splurge on from time to time.
So, how does that impact the way we head into our financial future with our significant other? Fortunately for us, merging all accounts and paying with one joint credit card and a joint checking account isn’t the only option.
Do we really need to combine finances?
The short answer, no, definitely not! Of course, if you want to completely merge all finances, go for it. But, that’s probably not the answer for most thirty-something women, particularly those who aren’t thinking about children at this point. It certainly hasn’t been for me.
There are, however, a few considerations to take into account regardless of whether you’re moving in together or tying the knot. Because even though you may be keeping your finances separate, you still want to be aware and on the same page. Financial surprises aren’t something you want to encounter if you decide to have children or buy a house down the line!
No, but discuss your financial picture
It may not be a conversation you’re looking forward to, but before you take steps towards cohabitation or getting engaged, you’ll want to discuss your financial picture, expectations, and outlook.
Are there student loans? What about credit card debt? Have you both been contributing to your retirement accounts? Do you know your credit score? What assets do you have? How much is in your emergency fund? The last thing you want is to move in together and find out they have a years’ worth of living expenses sitting on their credit card or that they’ve never contributed to an IRA or 401(K).
And don’t spring this conversation on your significant other. Set aside an evening to both come to the table prepared to discuss your bigger financial picture, how you’ve gotten there, and how you’ll go forward together.
No, but put your budget out in the open
Beyond your financial facts and figures, you’ll also want to discuss budgeting and financial values. This can mean a few different things. It can include how you spend, what you spend on, and when you save.
For example, one of you might be a spender, one might be a saver. How will that impact your day to day? It’s better to put these things out in the open to avoid resentment or judgement over the other person’s spending.
Similarly, discuss where it’s important in your budget for you two to spend and where you’d rather save. Even if your accounts and credits are separate, you still can be on the same page regarding where and when you’re spending. For my fiance and I, we’ve decided we’d rather save on random weekday meals out by meal planning, preparing our lunches at home, and cooking most nights so that we can spend more on travel.
And, perhaps most importantly at this stage, what are your expectations for budgeting in regards to moving in together, getting married, and starting a life together? Discuss the number you’re willing to spend on rent or a mortgage payment, what your priorities are in arriving at that number, and…the dreaded wedding budget.
No, but consider one join account for shared expenses
While I haven’t done this yet with my fiance because we’ve found Venmo works for us for shared expenses, we do know at some point we’ll consider creating one joint account for shared expenses including rent, mortgage, bills, etc.
Some people contribute to these 50/50, others do percentages based on income. However you choose to do it, this account would cover shared expenses and perhaps, if you’re playing the points game, pay off a joint credit card that’s used on the front line for those expenses.
No, but create a long-term plan
Once you have your financial pictures straight, your budgeting priorities set, and your plan of attack for shared expenses, it’s time to create a long term plan. And that doesn’t necessarily have to include merging all your finances.
You both can commit to saving a certain percentage of your income, working towards retirement, travel, and property goals, and respecting the financial values that you both have laid out. This is a conversation you can revisit as you move forward, but it’s one that can be achieved while still maintaining the independence you’ve earned over your thirty-some years.
What are your thoughts on combining finances with your partner?