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)