Is it better for couples to combine their finances?

It is better for couples to combine their finances after marriage, as it can promote transparency and help couples work toward financial goals together. A study in the Journal of Consumer Research also found that couples who combined their finances were happier and stayed together longer than those who didn’t.

Furthermore, 70% of people in a WalletHub survey found that sharing a financial account with a partner helps prevent conflicts about money. If you are thinking about combining your finances with your partner, here are some things to consider.

Tips for Combining Your Finances as a Couple

Communicate early and often

Be honest with your partner about your financial situation, including your income, debt and spending habits. This will prevent any surprises and can help avoid arguments about money.

For example, combining your finances may create some tension when someone is spending more money than expected, especially if one person is a saver and the other is a spender. But if you discuss things honestly, you can figure out a solution that works for everyone. You might conclude that combining all your finances is still a good idea, or you might decide it’s better to have one joint account for shared expenses and individual accounts for personal spending.

Make sure your financial goals align

If you are combining your finances, make sure that you both agree on what goals you want to tackle together with your shared money. Having shared financial goals can encourage collaboration and help you grow together as a couple. Some common goals for couples to have include building an emergency fund, paying off shared debt, and saving up for a down payment on a home.

Consider past debts

You will be the only person legally responsible for paying back any debt you have separately from your partner. However, if you decide to combine your finances, you could agree to use your shared income to pay back individual debts if it’s the best move for you as a unit. Just make sure to have an discussion before doing so.

In addition, if one person in the relationship has more debt and a lower credit score than the other, it may make it more difficult to apply for joint loans or credit cards. It may be better for the person with a higher credit score to apply individually to get better terms. With loans or credit cards you get jointly, you both will be responsible for paying the debt back.

Know which accounts can’t be combined

Even though you can combine your income in a joint bank account with your partner, not every type of financial account can be combined. For example, you won’t be able to get a joint retirement account, though each of you can list each other as a beneficiary. Also, debts that you do not own together, such as student loans, cannot be combined legally. However, you can tackle paying off the debt together.

There could also be times when you can combine accounts but probably shouldn’t. For example, you could completely combine your finances with someone you’re dating seriously but not married to, but it’s not a good idea. Instead, you could try sharing a joint account when you are in a serious relationship and then combine all your other bank accounts and assets once you are married. So, use your judgement before combining your accounts.

Decide how to split up bills and shared income

There are different ways you and your significant other can combine your finances. You could decide to combine all income and expenses together, divide expenses 50/50, split up expenses based on income, or have a joint account for shared expenses and a separate one for personal expenses. Discuss with your partner to figure out which way will work best.

To learn more, check out WalletHub’s guide on how to split your finances with your partner.