Relationships come in many shapes and forms.
From marriage to cohabitation to long-distance relationships, there is no one-size-fits-all when it comes to how you choose to move forward with a partner.
So why should combining your finances be any different?
In the past, there were clear societal pressures on what the “perfect” American dream looks like. It included settling down, having kids, owning a house with a beautifully manicured yard with a white picket fence, and maintaining a joint bank account together. If this is what you want, then more power to you!
But if you want something more flexible for your needs, then that’s perfectly fine, too.
The reality is that there is no right or wrong way when it comes to combining your finances. Every couple has their own needs – and that’s okay!
However, there’s no denying that money issues are one of the top reasons for divorce and breakups.
While there’s not an exact roadmap to follow for combining finances, there are several principles that can certainly make the process easier. It doesn’t matter whether you’re planning on getting married or cohabitating with your partner. The best part? These principles don’t just apply to finances. They can make other areas of your relationship stronger!
So what are these tips for combining finances with your partner?
Let’s take a closer look below.
How to Combine Finances as a Couple
It’s easier to combine your finances if each of you has a solid grasp on your individual budget. So before you begin this process, make sure that each partner already has a budget in place. Without knowing each partner’s income and expenses, everything you attempt will be pure guesswork and speculation.
At the very least, have a list that details your individual income, expenses, bank accounts, credit cards, investment accounts, and anything else that is pertinent to your finances.
Once your list is in order, then consider the following tips:
Create the ground rules together.
It’s important to be as upfront, transparent, and open as possible. As a couple, you two are a team. Withholding information or trying to hide something from your partner (such as debt), will undermine what you’re trying to accomplish. This process will protect you by ensuring that both parties are on the same page.
So what are the ground rules you want to establish?
For starters, answer the question: How “combined” do you want to be? Is everything shared – as in shared bank accounts and investment accounts? Or are you simply combining finances by splitting the bills and divvying up the financial responsibilities?
Again, there isn’t a right or wrong way to do this. Every couple has their own priorities, so the main goal is to ensure that you are on the same page. In other words, create your financial ground rules and stick to them.
Remember, you can always revisit this in the future. No relationship is static, and your financial plan shouldn’t be either.
Avoid any judgment.
When you choose to love a partner, you are choosing everything that comes with them, even the baggage. In some cases, this can include debt. Maybe it’s student loan debt or perhaps it’s credit card debt. It doesn’t matter what the situation is. If you’re committing to combining your finances, then make sure to create a judgment-free space.
Judgment can lead to struggles down the road, such as one partner feeling like they need to hide things in the future.
To avoid judgment, try to think about finances from a neutral perspective. Remove the emotional aspect and focus on the numbers If someone is in debt, it is what it is. There’s no point in trying to shame them for any previous decisions. Instead, this is about moving forward together as a team. Talk about how you can overcome these financial hurdles by creating a budget together and sticking to it.
Take it one step at a time.
Rome wasn’t built in a day, and combining your finances doesn’t have to happen in a day either.
These discussions can happen over the course of several days – or even weeks or months.
To avoid rehashing the same issues over and over, consider creating a specific goal for each discussion. For example, you could make your first meeting about talking about any outstanding debts you both have. The next meeting could be about your future financial goals, both short-term and long-term. Etc.
Finance is such a huge topic that it helps to break it down into smaller, digestible chunks.
This can also help prevent any feelings of being overwhelmed. Remember, there’s no rush. Take things at a pace that is comfortable for both you and your partner. Move as quickly or slowly as you need to.
Always protect yourself.
Don’t rush into something if you’re not ready. If you feel pressured to combine finances because of your partner or because of societal pressures, then it’s probably not the right time. Only move forward when you’re ready.
Protecting yourself isn’t about having a “backup plan” or “escape plan.”
Rather, it’s about protecting yourself emotionally. A healthy relationship is one where both parties feel supported, heard, and valued. If you don’t feel supported while combining your finances, then it could be a potential indication of other issues in your relationship.
If your partner is ready to combine finances but you’re not, that’s okay. Communicate your feelings and put this off until you are both on the same page.
Create a budget together.
Once you’re both on the same page, it’s time to actually create the budget.
What’s your joint income? And how do you want to split costs? Are you going to split everything down the middle – 50/50? Or are you going to divvy up expenses based on income earned? Will you combine your bank accounts and pay everything together out of the joint account?
Really take time to talk about your budget.
During this process, think about more than just the numbers. Emotions matter as well during this process, and it’s important to address any feelings now rather than to let resentment build up. For example, splitting costs 50/50 might seem like the most rational solution. But unless both of you are earning the exact same amount, splitting 50/50 means that one party is going to pay a higher share of their income to cover costs.
This can lead to hurt feelings. That’s not to say that splitting 50/50 is wrong. However, you’ll want to settle on a budget that is fair, doable, and agreeable for all parties involved.
Talk about your long-term goals.
If you’re combining your finances, then you are clearly committed to your relationship. This means that it’s time to start talking about what you both envision for your future.
Long-term financial goals can include: Buying a house together, saving up for a fancy vacation, starting a college fund for your kids, saving for retirement, etc.
In other words, if you were saving for your future as an individual, then you definitely should save together as a couple!
Continuously check in with each other.
Finances aren’t a set-it-and-forget-it type of deal.
People change and goals change. The economy changes. Jobs, income, and expenses all change.
At the very least, consider checking in on your budget together at least once a month. This will keep both of you on the same page and help prevent any unexpected surprises. Again, it all comes down to transparency and open communication with each other! It might not be the most fun thing in the world to talk business and handle financial housekeeping, but it’s key to keeping everything in order!
The Bottom Line
At the end of the day, your finances as a couple are an extension of your relationship. Just as you want transparency and teamwork in your relationship, you should prioritize these principles in your financial life together.
Want to connect with other couples going through the same experience? Do you want to hear about how others have dealt with this challenge in their own lives?
Then I encourage you to join the TBM Family on Facebook. It’s a great place to connect with people from all walks of life. You never know how new perspectives can shape your own!