One of the steps of furthering a relationship is deciding how to combine finances, if at all. More costs are joint as two people's lives get closer together, including housing, groceries, phone bills, utilities, and all kinds of other expenses. But these expenses can cause tension in relationships if not handled properly and without a clear understanding of who pays for what. Here are some ways to head off those awkward discussions.
Why Combining Finances is Different Today
How to Combine Your Money
- Pros - Easy to understand, and you are making a commitment that everything you two earn is for both of you.
- Cons - If one partner is a spender, they have access to all the household money and could come back with a new car or timeshare that you weren't expecting.
- Pros - HUGE savings rates, which allow for many options further down the road, such as vacation homes, early retirement, etc.
- Cons - Best used for couples who have combined finances already otherwise, it seems like one person is doing all the "heavy lifting"
Split Household Expenses, Everything Else Separate -This is a simple method to keep things relatively separate but pay for all the joint expenses together. Going out to your favorite band's concert without your significant other? Perfect, this is getting paid from your own account. Paying rent? You only pay half!
- Pros - It's an equitable way to pay for things together without "giving away the keys to the kingdom"
- Cons - Not many cons to this plan, but if incomes are disparate, then one person may feel left out of the extracurriculars. Additionally, if one person wants to buy a house and the other can't afford their share, it can cause tension.
- Pros - It is equitable as higher earners pay more and lower earners to pay less. Both share expenses but cover their own preferred expenses, such as hobbies and clothing.
- Cons - It's my favorite because I don't see a lot of cons with this one. Please let me know if you have one!
About the Author - Matt Gray is a Childfree Financial Planner who holds both the Certified Financial Planner® designation and the Chartered Advisor of Philanthropy designation. He enjoys working with his Childfree peers because he enjoys helping solve the specific needs of the Childfree community. Furthermore, he believes choosing a less traditional life path leads to more unique life stories and he loves helping those stories become a reality. Matt co-hosts the Childfree Life and Money Podcast with Dr. Jay.