When Should I Combine Finances With My Partner?

When It Makes Sense to Combine Finances

If you're in one of the following scenarios, it's reasonable, and potentially more convenient, to combine finances with a spouse or partner.

You're Married or Planning a Long-Term Future Together

For most couples, it's wise to wait until you've made a commitment to be together for the long term, whether you're married or living together, before blending finances.

Perhaps the most important element in the decision to combine finances is trust. If you'll be splitting essential expenses with a partner, and relying on them to regularly come up with their share, it's important to feel confident that you won't be left covering the whole balance. Before you open a shared bank account, it's crucial to enter into that commitment knowing your partner won't spend more than you've agreed on or overdraw the account.

Every couple is different, and you may decide to keep finances separate no matter your relationship stage. By the time you decide to be together long term, your relationship is more likely to have matured to the point where you can have open, detailed conversations about money. At this point, the benefits of combining finances—applying for a mortgage together, splitting bills with ease—may also outweigh the risks.

You Have Shared Financial Goals

An advantage of combining at least some aspects of your finances is working together toward shared goals. You may each decide to set up automatic transfers from your checking accounts or paychecks to shared savings accounts, for example. There, you can set aside money for joint vacations, holiday gifts or down payments for a house or car.

Combining finances when you have shared goals, like retiring together with a certain amount of money, can motivate you both to save. It also may give you access to particular account types, such as an individual retirement account (IRA) if you're married and one partner earns little or no money from work outside the home. In this case, the spouse without traditional compensation can open a spousal IRA in their own name, and the other spouse can contribute to it.

You're Fully Transparent With Each Other About Money

You're ready to combine finances only when you've had candid conversations about your financial views, habits and histories. Crucially, you each must also feel safe knowing your partner will have access to your money and will be responsible for paying shared bills.

To start, make sure you understand your partner's current income and ballpark expenses, whether they're already in the habit of saving money and whether they have debt or credit challenges. If you're intimidated by the idea of speaking openly about money or you want support bringing your financial lives together, you can work with a professional like a certified financial planner or financial therapist.

When You May Want to Keep Finances Separate

In some cases, your money and well-being are safer when you keep your finances separate and avoid joint bank accounts or credit products. Here are the circumstances when financial independence is the better choice:

You're Not in a Committed Relationship

The timing for each couple will vary, but the first several months of dating are an opportunity to get to know your partner. During this time it's wise to wait to understand their income, savings, debt and money philosophy before you consider long-term commitment or combining finances.

If you haven't decided to commit to each other long term, there's a higher risk that you could be surprised by your partner's extravagant spending, poor credit, inability to contribute to bills or avoidance of important conversations about money.

One Partner Has Significant Debt or Poor Credit

Even if you are in a committed partnership, it may be best to avoid co-borrowing or mingling finances if one partner comes into the relationship with high debt balances. That's because your ability to jointly qualify for a car loan or mortgage, for example, could be compromised if one partner has a high debt-to-income ratio (DTI) or bad credit.

Additionally, credit challenges may—though certainly don't always—indicate a tendency to pay bills late, overspend or take on unmanageable debt. Financial incompatibility doesn't have to mean the end of a relationship, but it does require more communication between partners. The partner with more financial difficulties may also benefit from working with a credit counselor to set a budget and pay down debt.

Learn more: Can I Buy a House if My Spouse Has Bad Credit?

You Have a Major Income Imbalance

Merging finances is also less straightforward when one partner earns significantly more than the other. In this case, it's harder to establish equity when splitting expenses or saving for the future.

Instead of completely combining your financial lives, and potentially creating resentment or guilt, try a hybrid strategy. You can contribute proportionally to shared accounts for savings and living expenses based on your incomes, then keep the rest separate to spend as you wish.

You may decide to combine finances anyway, however, and seek out alternative ways to ensure fairness in your budget—particularly when spending on nonessentials. For example, you could deposit your paychecks into the same account and then pick an amount each partner is entitled to spend as they choose without discussion.

How to Combine Finances

1. Start With Full Financial Transparency

Here are some important details for you to know about your partner, and for your partner to know about you, before merging finances:

• What messages did you get from your parents about money as a kid? How have these affected your approach to money today?
• Do you save money regularly, or do you typically have no money left over at the end of each month?
• What is your annual income?
• What is your outstanding debt?
• What are your recurring expenses?
• Are you investing money for the future?
• What are your top financial goals?
• What is your current FICO^® Score^Θ?

You can also discuss at what level you would like to combine finances now—whether you merely want to split shared expenses from separate bank accounts, or whether it's time to have joint accounts for spending, saving or both.

2. Review Your Credit and Financial Risks

Pull your free credit reports—available from Experian anytime or weekly from all three credit bureaus (Experian, TransUnion and Equifax) on AnnualCreditReport.com—and review them together.

Take note of any accounts in collections, late payments or other negative items that could give you important information about your credit management habits. Understand your total outstanding debt and consider how you'll pay it down before taking out loans together. Check your credit scores for free and identify any scoring factors that need attention so you can plan to improve credit, or keep it strong, throughout the relationship.

3. Choose the Right System for Your Relationship

Based on what you've learned about each other's money philosophies, and your own preferences, decide whether to combine finances fully, partially or not at all. Here are the decisions you'll have to make:

• Income: Will your paychecks get deposited into a shared account or individual accounts? You could, for example, keep separate checking accounts but contribute a certain amount per month to a new shared account, and pay for all joint expenses from there.
• Savings: Will you set up shared savings accounts where you both transfer money each month, or will you save separately for shared goals?
• Spending: Will you budget together, coming up with a plan for how much to spend jointly in various categories, or monitor your spending individually? Will you contribute to shared bills proportionally based on income, or split everything 50/50?
• Budgeting: Which budget plan will you use, either together or independently?
• Transparency: If you combine finances completely, do you plan to stay aware of each other's spending and discuss it? Even in a scenario in which your paychecks go to a single account and all spending comes from there, you could make rules that allow for autonomy—such as no questions asked on individual spending under $100 per item.
• Debt: Will you help each other pay down debt you brought into the relationship, or keep individual debt your own responsibility?

4. Check In and Review Your Financial Plan Regularly

Once you've set up a system—ensuring that all shared bills are paid on time and in full to protect the responsible party's credit—plan to check in monthly about how it's going. Discuss your budget, progress on saving priorities, spending concerns and debt balances. Most importantly, stay open to changing any elements of your system that aren't working. Remember that you're on the same team, which can help alleviate tension that, at some point, will likely come up.

Frequently Asked Questions

The Bottom Line

Any decision you make now to combine finances can be a dynamic one. Over the course of a relationship, you may readjust your budget and the finances you combine many times. For example, if you have children, paying for child care and saving for college will mean adding new line items to the shared budget.

It's also likely that one or both of you will change jobs, reduce or increase income or take an extended break from working. Keeping the lines of communication open at every stage will help maintain the health of both your partnership and your finances.