Should I Combine Finances with My Significant Other?

Matt Gray, CFP®

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

Most Baby Boomers and much of Gen X have combined their finances in the spirit of "what's mine is yours, and what's yours is mine." Younger generations have reconsidered this concept for a few reasons.

First, older generations usually got married younger. In 1980, the average age for a man to get married was 24 and just 22 for a woman. In 2021, the average age to get married for a man was 30, and over 28 for a woman! So, what does that have to do with finances?

Well, if you got married straight out of college, you didn't have any assets (a car and a class ring?). So, when you got married, you didn't have much that you felt you had earned and was "yours." Now, most of us are established in our careers and have built towards something of our own. Some of us own homes or businesses by our late 20s and want to protect them.

Additionally, younger generations are quite wary of divorce and know it happens often. There is no illusion that getting married is just a romantic endeavor; it's a financial one, too.

How to Combine Your Money

Every relationship is different, and there are plenty of ways to combine finances, so you'll need to find one that's right for you and your partner. Here are the popular ways I see it being done.

Complete Combination - This is the most traditional method where all the household money gets put into a joint checking/savings account. Paychecks go into this account, expenses are paid from it, and each partner has access to all of it. This often is how investment accounts work, as well, with everything outside of retirement accounts being combined and held jointly.

  • 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.

Living on One Paycheck - This method is quite rare and is most often seen with couples trying to retire extremely early (See: FIRE or FILE). This also may be best for married couples who also share joint accounts, so one person isn't left with nothing if things go south.

  • 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.

Yours, Mine, and Ours - Saving my favorite for last! This method keeps finances relatively separate, accounts for differences in income, and allows a decent amount of "sharing" income. Each partner has their own account and then shares a joint account. They both pay into the joint account a percentage of their income (can also do fixed dollar amounts). This allows for lower earners to still benefit from a high-earning partner without the high-earner giving access to everything. The household expenses such as rent/mortgage, groceries, utilities, and date night are all paid from the joint.

  • 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!

Of course, you can always elect to keep your finances separate, as well. There is no right or wrong way to do it! It just matters that you and your partner agree on a method you like before combining accounts!

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.