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Should Couples Combine Finances?

The topic of combining finances is one that frequently comes up with younger clients and clients that are remarrying. Here are some of the common questions I hear, and my typical response.

As hard as it is to believe, the world is changing! The topic of combining finances is one that frequently comes up with younger clients and clients that are remarrying, although it is certainly applicable to all couples. Couples can be traditional married couples, same-sex couples, engaged couples, life-long roommate couples, and every set of two (or more?) people in between. As more people wait until they are older to get married, there is a level of independence that has been achieved they may not want to give up. Combining finances can represent a loss of independence, control, and even privacy. Here are some of the most common questions I hear:

Should we combine all our accounts?

Anytime a question starts with “should” it is a clue that we are talking about a cultural norm, or money script. “Should” isn’t a good reason to do anything. People need to make decisions for them, and not worry about what others tell them they “should” do.

So it is a good idea to combine accounts? That is completely up to the couple, but both parties need to be comfortable with the decision to combine accounts. I have seen couples successfully maintain separate accounts and split the household bills in a way that works for them. I have even seen couples that “split” the children, so that each parent is responsible for the expenses of 1 child (assuming there is an even number of children). That being said, you have to find what works for you. At a minimum, it might be a good idea to have a joint checking account to pay bills out of because most couples don’t want to write checks to the other for the rent, as this can feel a little too much like college roommates.

Should I keep a separate account from my partner?

There is nothing wrong with keeping a separate account. If it makes you feel more comfortable to have some money stashed away in a personal savings account, then do it. This can also help keep some purchases “hidden” from your partner like gifts. Nothing is less romantic than a call from your partner asking what you bought at the flower shop!

Should I keep a secret account my partner doesn’t know about?

What is the reason for the secret account? Are you uncomfortable with sharing your entire financial picture? Are you planning to leave and want some cash built up? I am not usually comfortable with secret accounts unless there is a really good reason. In the case that one partner keeps a secret account out of fear, or other extreme emotions, I might recommend talking with a Money Psychologist that can help them articulate the reasons for the secret account. I don’t see anything wrong with keeping a separate account, but secret money probably isn’t healthy.

Will combining (or not combining) finances affect our ability to get financing?

Not to my knowledge. If both parties are applying for a loan, then all of their accounts can be listed to show credit worthiness, and it really doesn’t matter if the accounts are jointly held. I honestly can’t think of a reason this would affect the ability to get credit.

What are the downsides to combining finances?

One downside to combining finances is you may feel like you are giving up your independence. Your beliefs about money with drive what you are comfortable doing, and I am a big believer in doing what feels right when it comes to things like managing money.

Another downside is if you are married and live in a community property state (such as Wisconsin), putting money into a joint account means you are effectively giving your spouse 50% of the money. Although you are entitled to keep 100% of gifts and inheritances you receive, if you put the inherited money in a joint account, you may be giving half of it to your spouse. This really only becomes an issue in the case of a divorce.

The question isn’t if you “should” combine finances, it is if you want to. You don’t need to feel guilty for wanting to maintain some level of independence by keeping a separate account. Whatever you decide, I highly recommend that you keep the lines of communication open about the topic. If you have chosen to be in a relationship, I believe your partner deserves to have an understanding of your personal financial situation, especially if you are taking out joint loans, or if they are depending on you to provide income for the family. If you are having trouble discussing your finances, seek out a Money Psychologist to help facilitate the conversation. They aren’t easy to find, so shoot me an e-mail for a referral to one in the Milwaukee area.

So what do you think? Have you chosen to combine finances, or to keep them separate? Is there anything you would like to add to this list? Feel free to share in the comments section below! 

Alan Moore is a fee-only financial planner and founder of Serenity Financial Consulting in Shorewood WI. Follow him on Twitter @R_Alan_Moore. You can contact him at alan@serenityfc.com, 414-455-5313, or visit his website at www.SerenityFC.com. Want more education? Download your free guide to the “10 Easy Steps To Securing Your Financial Future Today.”

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mau October 20, 2012 at 08:07 PM
If you're going into a marriage with the attitude of mine and yours, then don't get married. Stay single, living under individual roofs and don't commit. We have both combined and individual finances but make joint decisions. We went into marriage as a couple. Community property and inheritance in Wisconsin can get complicated in a divorce. In my brother's case he owned a business and equipment, house and property, farmland (from his 1st marriage) plus inheritance from our parents. He had to pay 50% of any profits made from said assets, to his ex-wife. So that meant going through 18 years of financial records to determine who much profit was made from assets he accrued before his 2nd marriage.
mau October 20, 2012 at 08:08 PM
Typo "how".
Randy1949 October 20, 2012 at 08:30 PM
I agree, mau. If a young couple is starting out life with that attitude of not sharing, that's probably a bad sign for the marriage. But sometimes you have a case of two people marrying for the second time, late in life, with children from previous marriages who could be disinherited from 'family' assets if there isn't some kind of property agreement ahead of time.
mau October 21, 2012 at 12:30 AM
@Randy1949, I agree. But personally I would never do this a 2nd time. I think I see more problems with the couples who do not share the finances. Especially with credit cards. It is not good to keep secrets or hide things especially money. I will have to say I think there is a problem when someone feels they are losing their independence. That is someone who is insecure and I have never been or felt that way.

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