Thinking of Combining Your Finances?

Whether you’re seriously coupled or legally married, you may be considering the impact that combining your finances with your partner’s will have on your life together. Bank accounts and credit cards are just some of the ways that you can merge your financial worlds. If you’re looking to grow your wealth as a couple or achieve financial goals like buying a home, these are the key things to keep in mind.

Be honest about your finances and your concerns

Discussing finances can be a difficult or vulnerable conversation, so be sure to approach talking about money openly, honestly, and without judgment. Establish up front how much each partner makes and what your individual money management techniques are.

And address any concerns you might have—such as what will happen to your finances if you end your relationship—that would have an impact on your finances. Your goal is to flag any worries early and troubleshoot with potential solutions.

Establish personal and joint financial goals

What are the individual and shared financial goals in your relationship? If you both want to buy a house or book a vacation, you may reach these goals faster by working toward them with a shared account. Knowing that you’re working toward something together can create a sense of accountability.

If one partner wants to open a business or go back to school, they might prefer to open a separate savings account for their individual long-term goal. No matter what the goals are, keep the dialogue open and ensure that both partners feel understood.

Come up with a plan to tackle debt

Debt can put strain on any relationship, and it could prove to be an obstacle when combining finances. While some partners may want to offer financial help, others may feel less comfortable, or less able, to contribute; having an honest conversation about debt will help you come up with a plan. Once you have a handle on how much debt you carry individually or as a couple, you can think about how to begin eliminating that debt before or after combining your finances.

Create a budget that will support your shared finances

For a helpful snapshot of how your finances will look once combined, evaluate your spending habits and create a budget. (You can use this budget for the first few months and adjust as needed.)

When creating a budget, be sure to include common necessities such as rent, groceries, household expenses, subscriptions, and anything else you typically spend in a given week or month. With this budget, you can experiment with how much money you realistically need to set aside or invest as a couple month-by-month as you merge finances.

Agree on what accounts to combine

When it comes to combining your finances, you can maintain any number of shared accounts (while preserving separate accounts as needed). Do you want to share a credit card? Will you open a joint savings account? Or a shared checking account? Whatever accounts you choose to share, remember that each person will be legally allowed to withdraw or spend money from the account, and both people will be responsible for any resulting debts (or changes to credit score).

Jointly protect against financial hardships

Combining your finances will ideally help you reach both short-term and long-term goals together and feel more invested in your partnership. But what if you encounter financial hardship? Joining financial forces will require more protection, especially in the event that one partner passes away and the other must shoulder any financial burdens.

If you have children, own a home, or share debts, life insurance can help provide financial protection. A permanent life insurance policy like whole life insurance comes with additional features, including a guaranteed death benefit, potential dividends, and a cash value that grows over time. Whatever policy you choose, preparing for the future can help you and your partner feel more prepared to combine your finances in the present.