To Combine… or Not to Combine Finances (Three Methods of What Might Be Right for You)

Whether you are newly dating, just starting to get serious with someone, or about to get married, it’s never too early to start having conversations about finances. Understanding how your partner saves and spends money and discussing both of your long-term goals, are important considerations to determine financial compatibility and whether you should combine finances. Keep reading to hear more about when combining finances might make sense, when it doesn’t, and other things you may want to consider.

The Case for Combining Everything

When It Works: Having all of your accounts combined works really well for married couples (especially couples with shared children) who are like-minded on spending, savings, and future goals. So long as this continues to be a happy partnership, an added benefit of combining everything is simplification as there are fewer accounts to track and manage.

When It Likely Doesn’t Work: While combining all assets could work for unmarried couples who are newly dating/engaged, it is probably too early to start adding this level of complexity to your lives. Additionally, if you aren’t on the same page about how to manage your finances, this could create conflict down the line.

Additional Considerations: Having fully combined accounts requires great communication and transparency with your partner. People in the honeymoon phase rarely like to think of this, but in the event of a separation or divorce, dividing assets and determining who gets what (and who contributed what), could be a huge mess.

The Case for Keeping it All Separate

When It Works: Keeping things separate works best for couples who are in a relationship but not married or when each person is financially independent (no real joint expenses).

When It Likely Doesn’t Work: If you are planning to get married or have children, the more likely it is that you will have joint expenses (one household instead of two households, etc.). It means that finances could become harder to manage separately.

Additional Considerations: If you are married or considering marriage, you might want to talk to your partner about a prenup or a postnup if you truly intend to keep things separate (or even if you do not). Need to brush up on why a prenup/postnup might be right for you? Read more here. This is especially true if there was a prior marriage (or children from a prior marriage that you want to make sure have a separate pool of money), inheritances you don’t want commingled, one partner has significantly more wealth than another, or if there are large debts you want to keep separate.

The Case for the Hybrid Approach

When It Works: I have to be honest, this is my preferred method, so I am a little biased. The hybrid approach gives you the best of both worlds and works whether you’re married or not married but living together. This approach allows each member of the couple to manage their own finances separately (hopefully without any judgment from their partner) while having a joint account for shared goals and expenses.

When It Doesn’t: There are very limited downsides to this arrangement, but it does require communication and agreement on how joint assets are to be added to and managed.

Considerations: You’ll want to think through whether additions to the joint account will be split 50/50, as a percentage of total income (if there is a discrepancy in income), or whether you will be living off one income and saving the other. It’s also a great chance to consolidate your existing like-titled accounts to help simplify and organize your life.

Curious how others are managing their finances? See what other couples are doing and find out what might work well for you using a tool Ally provided here.

It’s important to have conversations about finances early. If you’re not sure where to start, here are a few questions you can ask your partner about money (maybe over a nice glass of wine). However you decide to move forward, relationships are a fun way to daydream about a joint future together and discuss individual and joint goals and how to best achieve them.