Yours, Mine, or Ours? Insights for Couples Merging Money

When done right, combining resources can provide unparalleled benefits. But when done wrong, it can lead to conflict and strain a relationship. So, is merging money a good idea?

Falling in love is all about sharing – sharing a place to live, your heart and soul, and your lives with one another. In that spirit of togetherness, one thing many couples eventually choose to do is combine their finances.

Although research consistently finds that couples who pool their money are more satisfied and more likely to go the distance, because every couple’s situation is unique, there isn’t a single right solution. Let’s explore the potential up and downsides of merging finances to help you make the best decision for your relationship…

The Case for Merging

Sharing finances reinforces the idea that you’re a unified team working towards common goals. It can deepen intimacy and trust when done correctly. Some of the biggest reasons couples merge money include:

Taxes and Other Monetary Benefits

Because the US Tax code contains a few marital perks, filing a joint return could lead to owing less or getting a larger refund. Married couples often fall into lower tax brackets together than they would individually, they can combine their federal estate and gift tax limits, and filing a single return is typically less time consuming and expensive. But it doesn’t stop there, you might be able to put more money into a retirement account since contributions can be made to a Spousal IRA, even if they haven’t earned income during the current year.

Beyond taxes, couples are often offered lower insurance premiums and can compare the cost of obtaining benefits through their own employer versus being added to each other’s health care, dental, etc.

Simplified Money Management

Your lives are already joined, so why not your money?

Think about it. You’re buying groceries for the same fridge, paying for the same home, and maybe even raising kids together. Having one main account for all these shared costs just makes sense.

You won’t have to keep moving money between accounts, and you’re less likely to forget important bills. Plus, when all your money is in one place, it’s easier to see where it’s going and stick to a budget together.

Shared Resources, Shared Financial Goals

Joining your money can help you reach your goals as a couple. When you have a joint account, you both see what’s being spent. It can help you both be more careful with money.

Big decisions become team decisions. Want to plan a family vacation? Thinking about buying a house? With a joint account, you’re in it together. You can talk openly about these choices and decide as a team.

Trust and Increased Transparency

Trust built upon open and honest communication serves as the foundation of a robust and lifelong partnership. Combining everything creates transparency, eliminating any financial secrecy.

To be successful, when money is all flowing into one pot, you’ll need a common spending strategy and have to agree on an approach to purchases. Big financial decisions must be made together. For instance, my husband and I discuss and plan for wish list items over a certain dollar amount.

Who Should Consider Joint Accounts?

The most common scenario is married couples merging accounts. However, long-term unmarried couples may also benefit from combining finances if they have shared objectives like buying property, having children, saving for retirement, etc.

In fact, any couple with shared money goals should think about it. Notice I said, “think about it,” not “do it.” It’s worth considering, even if you decide not to in the end.

For couples in second marriages or with blended families, merging money may be tricky. You might have kids from previous relationships or ex-spouses to consider. Your separate pasts might have present financial obligations, such as alimony or child support. A widow or widower may have a legal obligation to set a portion of their estate aside.

Remember, it’s important to account for unique circumstances, what works in one situation may not in others. The key is to think this decision through carefully, to be intentional about how you handle money as a couple rather than falling into what takes the least effort.

Who Should Keep Separate Accounts?

While combining finances offers benefits, it isn’t the best choice for every couple. Let’s look at when you might want to think twice before mixing your money.

To Fix Debt or Credit Scores

The saying, “two wrongs don’t make a right” applies here. If one or both of you have made some not-so-great choices in the past, joining accounts won’t fix the fallout. It might even add fuel to the fire.

If you have a great credit score, but your partner doesn’t, because of past mistakes, tread carefully. If you join accounts, their low score could drag you down rather than your pristine history bringing theirs up. Among other things, that could make it harder to get optimal loan rates or rent an apartment moving forward.

Fixing most money troubles requires dealing with root causes. Offer partners emotional support as they work to improve their financial health, over time. Until unhealthy money habits are addressed, it may be wise to have the more financially responsible partner manage most (or all) of the money.

If you’re struggling with behaviors around money, such as impulse buying or overspending, that are interfering with your progress, consider hiring a financial professional.

DIFFERENT HABITS AND PERSPECTIVES

Money management is a delicate topic. What one partner might see as frivolous, the other might see as essential. Our financial beliefs and habits are not set in stone but, since many trace back to our childhood socialization, they can be difficult to change.

Couples often have trouble agreeing on how much to give away, whether they should help family members and friends in need, how much to save, or how aggressively to invest. It’s easy to become judgmental, seeing our way of handling money as superior.

Keep in mind:
1) there are multiple ways to “do money right”
2) no one is perfect
3) you’ll probably get a lot further working on yourselves than trying to fix one another

Merging Money Can EXACERBATE Underlying Issues

Complete openness and honesty around finances requires vulnerability and trust. If those elements are missing, resentment can grow, and arguments become commonplace. Our approach to money is never purely logical – it’s an emotional, often highly charged (not to mention taboo) topic.

Tread lightly, schedule financial check-ins and make sure you’re having more positive than negative money interactions. Then, once the communication around finances is flowing, revisit the idea of resource consolidation…

Personal Preferences or Boundaries Around Money

Sometimes, couples simply prefer to keep their money separate. And that’s okay!

Maybe you have different views on how to spend, save, or invest. Or perhaps you just like having your personal account. As long as you both agree, there’s nothing wrong with keeping some money separate.

This doesn’t mean you don’t trust each other. It just means you respect each other’s boundaries when it comes to money.

Many couples have adopted a hybrid approach. They only combine some of their resources. Maybe they own a car or vehicle together but keep bank accounts separate. Perhaps they have both individual and joint accounts. Many couples keep just a little bit for themselves, so that they’ll have personal funds, fun money, or a way to surprise the other with gifts.

To Merge or Not to Merge, That is The Question

Ultimately, how you handle money is up to you. What works for most couples could be overly complex or outright disastrous for your situation. The “best” approach is a system that empowers you and your partner individually, furthers your joint financial goals, and enhances your relationship.

Regardless of how you decide to “do money” – merge, don’t merge, combine a little, or combine a lot – commit to an open and ongoing dialogue about financial needs, habits, values, and goals.

Support one another as you navigate decisions that will have a huge impact on your future, from daily decisions and identifying priorities to creating a shared vision and planning the next steps.

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