Combining finances – Do’s and Don’ts

So you have reached the stage in the relationship where you think it is a good idea to combine finances with your partner. (Congrats!) Perhaps you are not sure how to go about it, but you know you are sick of working out for who paid what last, and whose turn it is to pay for the next dinner.

I’ve been there. When my partner and I first moved in together I paid the rent and she paid for the groceries and we were always bickering whose shout it for pizza (we love pizza). This return wore thin pretty fast and started a new system, which was a matter of starting a joint account and laying down clear ground rules.

Here is some things you should know before combining your finance, and a few options on how you can do it.

Fools Rush In – Talk it over first

Nothing comes between lovers better than money, so it’s best to make sure you have a good setup before you throw each other’s pennies into the piggybank.

The first thing to realise is that joining money at this point in the relationship may or may not be right for you as a couple. There are no hard and fast rules on what’s right or wrong, despite what some people may think. Every relationship has a different dynamic, so you need to work out what works for you.

Best place to start is with a serious conversation where both partners can be honest and open to discuss their feelings towards combining funds. Don’t just push it onto your partner as you will find some people are fine combining finances and others will be reluctant. If someone in the relationship has previously shared money before than they may be uncomfortable rushing back down that path due to being taken through the ringer by an ex who used money irresponsibly in the past.

You need to be fully aware of the other person’s whole financial situation (especially debts) before you can commit to saying “your money is my money, and my money is your money” as that is obviously a big decision.

When talking it over its best to discuss why you want to combine finances. Is it for convenience? Because it shows commitment? Because you truly love and support each no matter what? Because you have been basically sharing for years but haven’t got around to it yet? Your “why” is important to know.

Once you’ve talked things over with your partner, you’re both ready to figure out how.

OPTION 1 -Combine the lot

The more traditional method of saying that it’s easier to combine everything. You have the same saving’s account, cheque account, spending account, car insurance and whatever else because it all comes out of the same honey pot. This method is only recommended for married couples or some long term stayers. The more established you are with substantial net worth or making good salaries, the more likely you are to be protective of your money.

OPTION 2 – Selectively Combine

This is the option my partner and I choose. We have a joint account, as well as our own individual accounts and assets.

We share all living expenses. The rent, groceries, services bills, home and contents and anything else that would be jointly shared. All of bills get taken out of the joint account which we both have a debit cards for and both have online banking access to keep track.

To make things fair we did a rough budget of what our joint expenses are then split the bill 50-50 and have both setup automatic weekly transfers from our personal accounts so no one forgets and always have money for rent money. If you are open and honest about all purchase before buying than this system is perfect. It’s works well for us because occasionally we will have extra money in the account where we will use to go out somewhere nice (don’t ask me why but it feels like someone is paying for some reason).

OPTION 3 – Not Combining

Yes this is an option, and for some people it is a great option. If after talking it over and looking at the choices, and you don’t think you’re ready to manage your money together, that’s cool! Especially if you’re not married. I wouldn’t be recommending joining your finances after living together a year. Money is a massive downfall of most relationship breakdowns these days because either both partners haven’t been open or honest or one person has abused their money privileges.

Separation for married couples is always a financial nightmare. This doesn’t mean not to ever combine your finances but to make sure you are 100% aware of your partner’s financial situation and spending habits.

Even if your finances are separate, you each deserve to be kept in the loop on some level. You still have to work as a team, and keeping things separate doesn’t mean you should be hiding things.

As a couple, you need to have a joint game plan for your money, whether it’s kept separate, sort of together, or completely together. It’s important to focus on working as a team and allowing each other to function individually within that team. That means having equal say in things like creating a spending plan!

Balance is key – one partner shouldn’t feel like they have less control or less say because they earn less. If you combine your finances, that ceases to matter. Its one shared pool, and you need to get past who might be contributing more.

Have you combined finances with your partner? How did you go about it? How long did you wait before doing it? Was it a successful outcome? Please share and comment on this article your thoughts and experiences or contact us directly.

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