Should Couples Combine Their Finances?

by Team Dinks on May 13, 2010 · 8 comments

swan heart couple

In a recent interview, a journalist asked me if I thought couples should combine their finances or not. Since arguments about money are one of the leading causes of divorce and stress in relationships, it’s an important topic that I wanted to share with my fellow DINKS—and get your comments on.

I told the journalist that my husband and I have always had joint accounts for everything—our bills, banking, and loans. Having joint accounts works really well for us, so that’s what I prefer. She told me that in her house, she and her husband have one main joint banking account for paying the bills, but that they also keep their own separate checking accounts for play money. She said that the secondary account gives both of them a feeling of financial independence.

My advice is to do what works for you, but to be open to making changes if your financial house gets out of order. For couples who aren’t married or who divide like oil and water when it comes to how they handle money, keeping separate accounts may be best.

Here are 3 tips to follow when you combine finances with your sweetheart:

1.  Share your net worth.

If you don’t each have a net worth statement, create one and share the information before you combine your finances in any way. How do you do that? Simply make a list all of your assets and their values, such as cash, investments, vehicles, homes, jewelry, and so on. Then list out your liabilities, or what you owe. That might include a mortgage, car loan, student loan, credit card balance, or retail store card balance. Once you add up the value of everything you own and subtract out the balances of what you owe, you’re left with your net worth.

The purpose of calculating your net worth is not to make you feel superior if you’re worth more than your partner, or inferior if you’re worth less. The point is to share a full financial disclosure on paper so that there are no surprises down the road. You need to know your partner’s level of debt—especially if you plan to co-sign for new accounts. If you’re not comfortable sharing the details of your finances, then it’s possible that you’re not with the right person or that you need counseling to understand your reluctance.

2.  Discuss your credit scores.

If one half of a couple has poor credit, it may be a good strategy to keep your finances completely separate until they raise their credit score. To do that, they’ll need to settle up on any overdue bills, pay bills on time, and try to pay down debts as much as possible.

3.  Reveal your financial goals.

If you’ve always wanted to buy a house on 10 acres, but your partner dreams about renting an apartment in the city and living on a sailboat part-time, then I don’t have to be a fortune-teller to know that you may have some problems. If your big financial dreams concerning homeownership and retirement, for instance, are way out of line, you need to work out those differences as soon as possible.

Remember that untwisting the personal finances of a couple can be very difficult if the relationship ends. If you’re simply not committed or don’t agree on money matters, it’s best to keep the majority of your personal finances, well, personal. That financial separation may help keep you from losing that lovin’ feeling.

(Photo by Keith Marshall)

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{ 7 comments… read them below or add one }

1 James May 16, 2010 at 5:36 pm

Solid advice. The only thing is weather or not you should keep some funds separate so it doesn’t feel like one persons is overpowering the other financially.

2 marg May 17, 2010 at 2:12 am

Wow, the writing on this blog is really, really terrible. Awful. Terrible grammar, excessive and redundant words (the opposite of tight writing; not sure what that’s called other than rambling), annoying jargon — all combined with simplistic entries. No wonder your subscriptions have plummeted lately!

Here is the blog entry with at least somewhat improved & corrected grammar and writing:

During a recent interview, a journalist asked if I thought couples should combine their finances. Arguments about money are one of the leading causes of divorce and stress in relationships, so I want to share my answer with fellow DINKS—and get your comments.

I told the journalist that my husband and I have joint accounts for everything—our bills, banking, and loans. Having joint accounts works well for us. The journalist told me that she and her husband have one main joint banking account for paying the bills, but that they also keep separate checking accounts for play money. She said the secondary accounts give each a feeling of financial independence.

My advice is to do what works for you, but to be open to changes if your financial house gets out of order. For couples who aren’t married or who divide like oil and water when it comes to handling money, keeping separate accounts may be best.

Here are 3 tips to follow when combining finances with your sweetheart:
1. Share your net worth.

If you don’t each have a net worth statement, create one and share the information before combining finances. To do this, list your assets and their values, such as cash, investments, vehicles, homes, jewelry, and so on. Then list out your liabilities, or what you owe, which might include a mortgage, car loan, student loan, or credit card balance. Once you add everything you own and subtract the balances of what you owe, you’re left with your net worth.

The purpose of calculating your net worth is a full financial disclosure on paper so there are no surprises down the road. You need to know your partner’s level of debt—especially if you plan to co-sign for new accounts. If you’re not comfortable sharing the details of your finances, then it’s possible that you’re not with the right person or that you need counseling to understand your reluctance.
2. Discuss your credit scores.

If one half of a couple has poor credit, it may be a good strategy to keep your finances separate until he/she raise his/her credit score. To do that, the person with poor credit will need to settle any overdue bills, pay bills on time, and try to pay down debts as much as possible.
3. Reveal your financial goals.

If you’ve always wanted to buy a house on 10 acres, but your partner dreams about renting an apartment in the city and living on a sailboat part-time, I don’t have to be a fortune-teller to know that you may have problems. If your financial dreams concerning home ownership and retirement, for instance, are out of line, you need to work out the differences as soon as possible.

Remember that undoing a couple’s personal finances can be difficult if the relationship ends. If you’re not committed or don’t agree on money matters, it’s best to keep the majority of your personal finances, well, personal. Financial separation may help keep you from losing that lovin’ feeling.

3 Laura May 17, 2010 at 7:35 am

Hi, marg. I’ll be the first to say that I’m no Shakespeare. But the financial advice, ideas, opinions, and news offered to DINKS Finance readers by various bloggers is a fantastic resource.

4 Kristina May 17, 2010 at 11:41 pm

I agree with Laura. By the way, Laura, I love your writing and I always read your posts! My father announced this week that he is getting remarried to his girlfriend. They have been together for a long time but, they have very different personalities and their views on money are completely different. I do not feel that combining finances is a good idea especially when you don’t have the same opinion on money and budgets. Basically she tells my Dad what to do, and to avoid the fight he does it. As an example, she told him that if she dies first all of the jewellery he gave her goes to her daughters. However, if he dies first she wants all of the jewellery that she gave to him back. If you are on the same page then combining finances should be a smooth transition. But, if not, then it can be a disaster.

5 Lulu May 18, 2010 at 10:46 am

I am a firm believer in the three accounts for a couple rule. I think there should be a joint account to pay shared expenses like rent/mortgage and utilities but each person should have a separate account for their personal splurges. I don’t care how much my guy spends on new computer stuff…….and he does not have to see how much I spend on scented candles.

6 martha September 22, 2010 at 7:07 pm

Great post! Really good insight. It’s always difficult to discuss finances and share money in relationships. Thanks for your advice. I recently stumbled upon this blog like I stumbled upon yours. I think they offer some good points and laughter about the topic: http://burisonthecouch.wordpress.com/2010/09/22/dolla-dolla-bill-yall/

Thanks for the post! I’d like to see more like it.

7 Ernesto Shimon February 7, 2011 at 7:05 pm

I’d work on my credit if it wasn’t for this crummy job I have. No extra money these days.

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