I should preface this post by saying that I haven’t yet combined my finances with anyone, but since people frequently ask me this question—and since I plan to do so soon—I thought this was as good a time as any to start going over the possibilities.
Key word? Options. I won’t try to provide every scenario that could arise because there is an endless range of personal situations; instead, I will provide three possible actions that you could take to begin a conversation with your significant other.
What feels fair to you and your partner should be your first priority in all three situations. Our animal brains have an innate sense of justice, and when one partner in a relationship feels that something isn’t fair, it leads to resentment, which is a recipe for relationship failure, as anyone who has ever dated someone to the point of becoming unbearably close to them will attest.
There’s no one-size-fits-all answer to the question of whether married couples should put their money together. Some couples find that merging their finances strengthens their relationship and promotes a sense of unity, while others prefer to keep their finances separate to maintain financial autonomy. Ultimately, the best approach for each couple depends on their individual circumstances, preferences, and communication styles.
Arguments for Merging Finances
- Promotes a sense of unity and togetherness: When couples share their finances, it can create a sense of “we” instead of “me” and foster a stronger feeling of partnership.
- Simplifies financial management: Combining finances can make it easier to track expenses, pay bills, and manage budgets.
- Provides financial security: Pooling resources can offer a financial safety net for both partners, especially during times of hardship or unemployment.
- Facilitates joint financial goals: Sharing finances makes it easier to work towards shared financial goals, such as buying a house, saving for retirement, or paying off debt.
Arguments for Keeping Finances Separate
- Maintains financial independence: Keeping finances separate allows each partner to maintain control over their own money and make independent financial decisions.
- Prevents financial disagreements: Separate finances can help reduce the potential for arguments over spending habits and financial priorities.
- Protects assets in case of divorce: Keeping finances separate can provide some protection for individual assets in the event of a divorce.
- Accommodates different financial backgrounds and habits: Couples with different financial backgrounds or spending habits may find it easier to keep their finances separate to avoid conflict.
The Hybrid Approach
A growing number of couples are opting for a hybrid approach, where they combine some of their finances while keeping some separate. This allows them to enjoy the benefits of both worlds: shared financial goals and individual autonomy.
For example, a couple might choose to have a joint account for shared expenses, such as rent or mortgage payments, utilities, and groceries, while maintaining separate accounts for individual spending or savings goals.
Factors to Consider
When deciding whether to merge finances, couples should consider the following factors:
- Financial goals: Do you have shared financial goals, such as buying a house or saving for retirement?
- Spending habits: Do you have similar spending habits and financial priorities?
- Debt: Does either partner have significant debt?
- Communication style: Are you comfortable discussing finances openly and honestly with your partner?
- Level of trust: Do you trust your partner to manage money responsibly?
Tips for Managing Finances as a Couple
- Communicate openly and honestly about your finances.
- Establish a budget and track your expenses together.
- Set financial goals and work together to achieve them.
- Respect each other’s financial decisions.
- Seek professional financial advice if needed.
There is no right or wrong answer to the question of whether married couples should put their money together. The best approach depends on the individual circumstances and preferences of each couple. By carefully considering the factors involved and communicating openly with each other, couples can make an informed decision that works best for them.
Frequently Asked Questions
What are the benefits of merging finances?
Merging finances can promote a sense of unity, simplify financial management, provide financial security, and facilitate joint financial goals.
What are the benefits of keeping finances separate?
Keeping finances separate can maintain financial independence, prevent financial disagreements, protect assets in case of divorce, and accommodate different financial backgrounds and habits.
What is the hybrid approach to managing finances?
The hybrid approach involves combining some finances while keeping some separate. This allows couples to enjoy the benefits of both worlds: shared financial goals and individual autonomy.
What factors should couples consider when deciding whether to merge finances?
Couples should consider their financial goals, spending habits, debt, communication style, and level of trust when deciding whether to merge finances.
What are some tips for managing finances as a couple?
Couples should communicate openly and honestly about their finances, establish a budget and track their expenses together, set financial goals and work together to achieve them, respect each other’s financial decisions, and seek professional financial advice if needed.
Olson stated that merging encourages better financial goal alignment and transparency as well as a societal understanding of marriage. Couples who were instructed to open joint bank accounts reported significantly higher relationship quality two years later than those who kept separate accounts.
Other study authors are Scott I. Rick, associate professor of marketing at the Ross School of Business at the University of Michigan; Deborah A. Small, the Adrian C. Israel Professor of Marketing at the Yale School of Management; and Eli J. Finkel, professor of management and organizations at the Kellogg School of Management and a professor of psychology at Northwestern.
Olson stated that people in marriages might believe it is simpler to end the relationship if they have separate accounts. Twenty percent of the couples who started the study did not complete it, and a sizable portion of those who separated after not combining their bank accounts were among them. They found no gender differences in the results.
The mean age of participants was 28 years old. Three quarters were white, and 12 percent were Black. Thirty-six percent of the population had a bachelor’s degree and a $50,000 median household income. On average, the couples had been romantically involved for three years and had known each other for approximately five years. Ten percent had children.
In a communal relationship, partners attend to each other’s needs when they arise. ‘I want to help you because you need it. I’m not keeping track,’” she said. One viewpoint that we hypothesized would be connected to a joint bank account is the “we” perspective. ”.
Key word? Options. I won’t try to provide every scenario that could arise because there is an endless range of personal situations; instead, I will provide three possible actions that you could take to begin a conversation with your significant other.
If you’re both pretty frugal and both of you are making a lot of money in your relationship, splitting $300,000 between two people who don’t spend much money probably won’t cause any problems. However, if you and your partner are earning $80,000 together and one of you is a spender and the other a saver, you may discover that the “one pot” solution is more trouble than it was worth in the beginning.
What feels fair to you and your partner should be your first priority in all three situations. Our animal brains have an innate sense of justice, and when one partner in a relationship feels that something isn’t fair, it leads to resentment, which is a recipe for relationship failure, as anyone who has ever dated someone to the point of becoming unbearably close to them will attest.
This is probably the only sensible option if you’re in a relationship where neither of you works or participates in the traditional workforce (though even as I write that, I wonder how you’re supporting yourself now if that’s the case, but I digress). Of course, a lot of people who DO have two incomes also arrange their finances in this manner: both sources of income are deposited into the same checking and savings accounts, which are then utilized to fund the investment accounts and pay bills.
Because the person who makes more may wish to spend more than the person who makes less, the “Proportional” path works particularly well for couples with extremely large income differences. In that case, the incomes of each partner will determine how much is contributed to the joint account.