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Navigating finances with a partner requires clarity, communication and a shared strategy. Money can be a common stressor for individuals and aligning spending attitudes and budgets is key for a successful financial partnership. Whether you’re just beginning to combine finances or refining an existing approach, this blog details considerations and steps to strengthen your financial plan and partnership.
Financial problems can create friction in relationships, so it’s important to be transparent when considering combining finances. An eye-opening statistic from Talker Research found that on average couples have 58 arguments a year about money, which breaks down to more than one argument per week! Open and honest communication is key to keep arguments at bay and your finances on the right track. There is no “one-size-fits-all” method to manage finances within partnerships, but there are some things to consider as you find the right balance for your relationship.
Identify Individual Money Mindsets: Before you combine bank accounts, it’s important to understand your partner’s financial values. Discuss current spending attitudes, financial habits and strategies to work together when handling financial matters moving forward. Find out the answers to these three important questions:
List Expenses and Create a Budget: When taking the step to combine finances, expenses are often combined, which can offer cost savings. Make a list of all expenses to give each other a comprehensive picture of where your money is going and then evaluate where costs can be reduced, such as duplicate streaming and subscription services, rent, or mortgages. Be sure to include all areas where money is spent and be transparent about individual purchases. Develop a budget that accounts for combined expenses and decide how you will divvy up financial responsibilities. Will you split contributions 50/50 or base individual contributions on salary? Once you know the budget you must work with and your combined expenses, you can determine what’s left over for savings and future goals. If you need help organizing a budget, read our “How to Budget Your Money Using the 50/20/30 Rule” blog post.
Determine Future Financial Goals: A successful financial future requires commitment and planning. Evaluate your financial goals as a couple and put a plan in place to start setting money aside for important milestones. An emergency fund should be prioritized to help pay for those unexpected expenses that often come at the most inconvenient times. If vacations, a new vehicle, or purchasing a home is on your list of goals, discuss what saving for those items looks like with your combined budget. Remember, it’s never too early to start saving for retirement! The earlier you start, the better position you’ll be in when retirement comes. Talk about individual plans such as employer sponsored plans (401K/403B) and individual retirement accounts (Traditional IRA/Roth IRA) to budget appropriate contributions.
Once you have a solid understanding of your partner’s views on money, have detailed your monthly expenses, set a budget and identified your joint financial goals, it’s time to decide how to manage your finances and accounts as a couple. There are benefits to both combining finances and keeping them separate. This is a decision you and your partner will need to consider to determine the best option for your relationship.
Joint Account – Having your finances combined into one joint account allows you to pool your money together to pay for all your expenses from one account. This includes rent/mortgage, utility bills, loans, groceries, entertainment, etc. This allows for a simplified method to combine income to pay for all expenses which often makes household expenses easier to manage. It also gives full transparency into spending and savings which can help reduce confusion and support accountability. However, some feel a loss of autonomy with joint accounts as individual purchases may feel scrutinized, or conflicts can arise if one partner is more frugal or impulsive.
Separate Accounts – Keeping finances separate allows each partner to maintain autonomy over their personal spending and saving habits which can often reduce conflict. It also allows space for personal spending, gifts, or discretionary purchases. However, many find separate accounts make splitting bills and coordinating payments more complex. Partners may also struggle to stay aligned with goals without shared saving or investment structure.
Combo Accounts – A hybrid approach that can often offer the best of both worlds is to hold a joint account as well as individual accounts. The joint account can be used for shared bills and savings goals, while individual accounts can be used for personal expenses or discretionary spending. Many couples succeed with this system as it provides transparency where it matters but also gives independence where it’s needed.
Regardless of which account option you decide on to manage your money, combining finances is a big step and one that may require adjustments as time goes by. Be sure to remain transparent through the process to avoid confusion. Communicate openly to develop a system that works for both of you and don’t be afraid to seek help and resources when necessary to help ease the transition.
SDCCU offers many free financial resources for creating a budget and creating a spending plan to help research your options. Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for Financial Wellness Wednesdays.
Financial problems can create friction in relationships, so it’s important to be transparent when considering combining finances. An eye-opening statistic from Talker Research found that on average couples have 58 arguments a year about money, which breaks down to more than one argument per week! Open and honest communication is key to keep arguments at bay and your finances on the right track. There is no “one-size-fits-all” method to manage finances within partnerships, but there are some things to consider as you find the right balance for your relationship.
Identify Individual Money Mindsets: Before you combine bank accounts, it’s important to understand your partner’s financial values. Discuss current spending attitudes, financial habits and strategies to work together when handling financial matters moving forward. Find out the answers to these three important questions:
- Do you tend to save money while your partner loves to spend?
- Do either of you associate money with stress, security, or freedom?
- What messages about money did each of you learn growing up?
List Expenses and Create a Budget: When taking the step to combine finances, expenses are often combined, which can offer cost savings. Make a list of all expenses to give each other a comprehensive picture of where your money is going and then evaluate where costs can be reduced, such as duplicate streaming and subscription services, rent, or mortgages. Be sure to include all areas where money is spent and be transparent about individual purchases. Develop a budget that accounts for combined expenses and decide how you will divvy up financial responsibilities. Will you split contributions 50/50 or base individual contributions on salary? Once you know the budget you must work with and your combined expenses, you can determine what’s left over for savings and future goals. If you need help organizing a budget, read our “How to Budget Your Money Using the 50/20/30 Rule” blog post.
Determine Future Financial Goals: A successful financial future requires commitment and planning. Evaluate your financial goals as a couple and put a plan in place to start setting money aside for important milestones. An emergency fund should be prioritized to help pay for those unexpected expenses that often come at the most inconvenient times. If vacations, a new vehicle, or purchasing a home is on your list of goals, discuss what saving for those items looks like with your combined budget. Remember, it’s never too early to start saving for retirement! The earlier you start, the better position you’ll be in when retirement comes. Talk about individual plans such as employer sponsored plans (401K/403B) and individual retirement accounts (Traditional IRA/Roth IRA) to budget appropriate contributions.
Once you have a solid understanding of your partner’s views on money, have detailed your monthly expenses, set a budget and identified your joint financial goals, it’s time to decide how to manage your finances and accounts as a couple. There are benefits to both combining finances and keeping them separate. This is a decision you and your partner will need to consider to determine the best option for your relationship.
Joint Account – Having your finances combined into one joint account allows you to pool your money together to pay for all your expenses from one account. This includes rent/mortgage, utility bills, loans, groceries, entertainment, etc. This allows for a simplified method to combine income to pay for all expenses which often makes household expenses easier to manage. It also gives full transparency into spending and savings which can help reduce confusion and support accountability. However, some feel a loss of autonomy with joint accounts as individual purchases may feel scrutinized, or conflicts can arise if one partner is more frugal or impulsive.
Separate Accounts – Keeping finances separate allows each partner to maintain autonomy over their personal spending and saving habits which can often reduce conflict. It also allows space for personal spending, gifts, or discretionary purchases. However, many find separate accounts make splitting bills and coordinating payments more complex. Partners may also struggle to stay aligned with goals without shared saving or investment structure.
Combo Accounts – A hybrid approach that can often offer the best of both worlds is to hold a joint account as well as individual accounts. The joint account can be used for shared bills and savings goals, while individual accounts can be used for personal expenses or discretionary spending. Many couples succeed with this system as it provides transparency where it matters but also gives independence where it’s needed.
Regardless of which account option you decide on to manage your money, combining finances is a big step and one that may require adjustments as time goes by. Be sure to remain transparent through the process to avoid confusion. Communicate openly to develop a system that works for both of you and don’t be afraid to seek help and resources when necessary to help ease the transition.
SDCCU offers many free financial resources for creating a budget and creating a spending plan to help research your options. Visit our Financial Knowledge Blog to learn more tips on setting up a solid financial future or join us for Financial Wellness Wednesdays.
