Coupling Your Finances

As a new couple, or a couple who has been together for a while but looking for a financial change, you may be wondering whether you should embark on the adventure of combining your finances.

My husband and I went through this exercise when we first starting sharing expenses, soon after we moved in together. This article addresses some of the pros and cons you may face in making this decision. The key to each of the options is to communicate with each other. This is one of the hardest parts of being a couple, whether it has to do with money or not! Don’t they say that the majority of divorces are caused from unresolved money issues? If you keep some of these tips in mind, you can have a healthy relationship and a healthy pocketbook!

There are a few different ways to combine your finances:

Combine It All

Set up a combined chequing and savings account, and close your old accounts. Both of your pay cheques are deposited into the joint chequing account and all bills are paid out of that account. This means that Jane’s $200 haircuts are paid from the same account as Paul’s $20 haircuts! Okay, that sounds really bad, but this option can work really well. You can start thinking about your finances as “us” rather than “me and you.” It is ideal that you know how your money is being spent. Each person in a couple should be responsible for knowing what’s going on with their cash.

Contribute 50/50

Each of you would keep your individual accounts, then put a set amount in each month in an equal proportion ($500 each if you want to contribute $1,000 per month to pay joint bills). You are each using half of the utilities or groceries so you should contribute equally, right? Keep in mind that this approach works better for couples who have similar incomes. The lower earning spouse may not appreciate having only $100 after the monthly joint contribution when the other person has $1,000 to blow.

Contribute Based on Income

When couples make significantly different salaries, this is the happy medium option. For example, one spouse makes $34,000 and the other makes $50,000. If you want to put $1,000 each month into your joint account, the first spouse should contribute around $400 and the other spouse should put in around $600. This means each person has the same percentage of money left over for their own personal use.

There are many reasons to combine your finances, other than the reasons described above. In general, it may be cheaper and less of a strain on your relationship to combine your cash. You are brushing your teeth with no makeup on in front of this person, so how hard can it be to talk about money!

Bank fees – It is difficult to find a no-fee chequing accounts in this country. If you combine your bank accounts, you will only have to pay one set of bank fees. Keep in mind that many banks charge by the transaction, so if you are going to have more transactions each month with the two of you, you should look into the different banking packages offered to see if you can increase the number transactions per month (with a small increase in the monthly fee – but it’s better than paying two fees!). Check with your banker – they may waive the monthly fee if you hold more than one account with them.

Paying Bills – Many couples who have not combined their finances have to deal with the “I’ll pay this bill and you can pay next month,” or “I’ll pay the grocery bill and you can pay the utilities.” This can end up straining your relationship in ways you may not foresee. For example, if one spouse pays the utilities and the other pays the groceries, you may be living in a freezing cold house in the winter (the person paying the utilities keeps turning down the heat) or you may end up eating Ramen noodles for dinner (the person paying for groceries refuses to buy steak!). By combining your finances, all of your joint bills come out of the same account so you don’t have to worry about who is paying for what. The key is communication so you can compromise; turn the heat down a notch and wear an extra layer, or have a chicken breast for dinner instead of steak. This will ensure there is no resentment between spouses.

Joint Savings – It is so important for couples to be on the same page with their goals. Sit down with each other and write up a list of what you want to save up for. Is it a flat-screen TV or some upgrades around the house? Set up an automatic amount to go into your savings account (any amount will do – just do it!) and keep your list somewhere handy to remind yourselves what you’re saving for. I can tell you from experience that you feel way less guilty when you purchase something you’ve saved up for!

After all of those amazing pros, why wouldn’t you want to combine your finances?

Privacy – This is more than just knowing what your spouse bought you for Christmas by looking at your bank statement! There are some couples out there who may be concerned about privacy or trust when it comes to money. We have all heard the horror stories where one spouse cleared out the bank account and took off, or bought something ridiculous with the other spouse’s hard-earned cash! If you don’t trust your partner with your combined finances, are there other aspects of your relationship you don’t trust him or her? I am not a shrink and don’t want to delve too deeply into this issue, but it is something to keep in mind. Communication and openness are key when it comes to your money, and if you have to give up some privacy with your loved one to get ahead financially, it may bring you closer together!

Different Goals – Many couples are made up of a spender and a saver. One person only spends money when it is absolutely necessary (like when there are holes in his pants) and the other person spends money when he or she sees something on sale in the mall. The key to any relationship is balance, and the best way to this is communication. I know it sounds wishy-washy, but it is really important! Sit down with your spouse and discuss your goals. Maybe you haven’t actually thought about what your goals are. Try to align your goals with your day-to-day habits. For example, if the spendthrift spouse’s goal is to look trendy and fabulous, maybe you can compromise by shopping at a high-end consignment store, or saving up to buy the latest Manolo Blahniks without compromising the other spouse’s goals.

Overall, if you are comfortable and in a committed relationship with your spouse, I think it is a great idea to combine your finances. Of course, complete combination may not work for you but there are other great options to try as I’ve outlined above. You might even find your own combination that works just for you. The more you work together on creating common goals and communicating about your money, the easier it will be in the future. Once the money issues are dealt with, you only have to deal with your spouse leaving his socks on the floor (the laundry basket is RIGHT THERE!).