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Money undeniably holds significant influence in relationships. Therefore, when it comes to merging finances as a couple or choosing not to, it becomes crucial to thoroughly examine all aspects and approach the conversation together as a team. Embracing this team mentality has considerably eased the discussions around money for us.
Things to consider before combining finances.
Having spent 9 years living together and nearly 5 years in marriage, my husband and I adopted a shared approach to money early in our relationship. However, it took us a while to establish a concrete system for combining our finances. I would like to offer a list of considerations before making significant decisions regarding finances as a couple. This compilation includes lessons we’ve learned over the years and valuable tips we’ve gained from Coast Capital, Canada’s largest federal credit union in terms of membership.
1. Each other’s backgrounds.
Taking into account each other’s financial history and relationship with money is incredibly important as it can bring clarity and understanding to future discussions. Such conversations require openness and trust. A fantastic way to initiate these discussions is through Coast Capital’s card game, “Talk Money To Me,” which facilitates important money conversations that couples may have been avoiding. In our own relationship, my husband and I had these conversations early on. We delved into the financial environments we grew up in, identifying aspects we wished to replicate and areas we wanted to avoid. I also had to be honest about my past mistake of opening too many credit cards during my youth.
2. Your financial state of affairs.
Another important aspect for couples to consider is their current financial situations individually. Once again, openness and trust play a crucial role. While some individuals prefer to maintain certain accounts as private, approaching finances as a team has been essential in minimizing stress. It is helpful to approach the following financial categories purely as numbers and facts, without attaching any ego or personal narratives to them:
- Income
- Debt
- Savings
- Investments
When we first moved out, our primary focus was discussing our incomes to ensure we had sufficient funds to cover rent, bills, and essential expenses.
While we didn’t deliberately keep our other accounts a secret, we didn’t give them as much attention as we should have. Each of us dealt with our individual accounts independently. While some couples may choose this approach, we realized that by not looking at our accounts from a holistic perspective from the beginning, we weren’t making fully informed decisions that considered both of us as a unit.
3. Your financial approach.
Giving careful thought to how you will handle expenses as a couple is crucial. Questions to consider include: How much will you combine? Will you keep anything separate? It’s important to remember that your approach doesn’t have to be rigidly fixed.
In our own financial journey, we have embraced a fluid approach. We adapted our strategies as we progressed through different life stages, with each of us assuming more or fewer financial responsibilities based on the circumstances.
While watching Coast Capital’s webinar, we learned about three primary financial approaches:
- Proportional. When each person contributes to the household expenses at a rate that is proportional to their income, ie if you make more, you contribute more.
- Raw. When each person contributes the same amount. I.e. expenses are split 50/50, or each person puts the same amount into a joint account, regardless of income differences.
- Complete. All income from both partners is part of the pot. Everything is considered the household’s income and can be managed through joint accounts, and shared credit cards.
Currently, our financial approach is a combination of both a proportional and complete method, which has evolved over time.
When we first moved out, we leaned towards a raw approach. We had separate accounts and similar incomes, so we divided expenses evenly, and whatever remained was considered our personal business. Although we split rent and bills equally, we weren’t meticulous about tracking other expenses.
A couple of years later, my husband obtained a higher-paying job, resulting in a shift towards a proportional approach. This trend continued when I transitioned from a retail job to a more traditional 9–5 role, initially taking a pay cut. While we followed a proportional practice, our mindset leaned more towards a complete approach, viewing all money as belonging to the household.
As we approached and after our marriage, we solidified our complete approach. We would regularly sit down to review our accounts with each paycheck, adjusting allocations to cover not only expenses but also each other’s needs. Regardless of the account, our money became mutually shared and intertwined.
Subsequently, when my husband decided to pursue further education, I took on the financial responsibilities to support him during this phase. We view this as taking turns to support each other throughout life’s journey. Despite being the sole provider of income at present, we maintain our practice of sitting down together as a team to review our finances. Once again, we approach our finances as a unified entity, considering all our resources as part of one shared pool.
4. Shared accounts or separate?
Once you have determined your financial approach, it is essential to consider the practical aspects of splitting and/or combining your money, such as where you will keep your funds and what types of accounts you will hold together and/or separately.
Having joint accounts can greatly simplify managing shared expenses, regardless of your chosen financial approach. While my husband and I genuinely perceive our finances as one consolidated pool, we maintain a combination of accounts. This includes separate checking and savings accounts that we had before entering the relationship, joint accounts that provide convenient access to our shared funds, and authorized access to each other’s credit cards.
5. Frequency of financial check-ins.
In simpler terms, how frequently will you schedule “money dates”? When merging finances as a couple, it is vital to commit to regular check-ins. This ensures that you stay on track and allows for adjustments to your systems and approaches along the way.
My husband has always been the one to advocate for “money dates,” and I’ll admit, it was initially uncomfortable for me. I wasn’t accustomed to confronting my spending habits directly, let alone being open about them and acknowledging their impact on our household.
However, now that we have established a regular practice of sitting down together, reviewing our accounts, and making plans for the future, I actually find myself looking forward to these check-ins. It also helps that we often turn them into a little date by having dinner together.
6. Getting help with your finances.
There’s no need to navigate your finances in isolation! Seek guidance from experts, advisors, or even your network of family and friends. Take what resonates with you and disregard what doesn’t align with your situation. When my partner and I first started combining our finances, it was largely a process of trial and error. Looking back, I wish we had been aware of Coast Capital’s valuable resources and trusted team of advisors, as they could have potentially expedited our progress.
Remember, it’s never too late to seek help or expand your knowledge! Recently, we watched Coast Capital’s webinar on How to Combine Finances with your Partner, and it was immensely beneficial to articulate our financial approach and fill in any gaps in our understanding. We had been primarily focused on the present and the near future, but the webinar served as a wake-up call, highlighting the importance of engaging in more comprehensive “future planning and proofing.”
Final thoughts on combining finances as a couple.
I hope these considerations have provided you with valuable insights on how to approach combining finances with your partner. Implementing these tips has truly helped us avoid money-related conflicts in our relationship.
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