Money Management / Relationships

6 Questions to Ask Before Merging Finances With Your Partner (No Matter How In Love You Are)

By Tuesday, February 09, 2021

11 years.

That’s how long I’d been with my partner before making the decision to merge finances with him in a joint account. And we only partially merged our money, so we still have our own accounts. We made the decision mostly because we have shared expenses and have been living together for several years. So it was all about convenience for us.

I grew up in a family that lived paycheck to paycheck. As I got older and started to focus on school and later developing a career for myself, money was still tight. My budget dictated what kind of food I could eat and how I navigated the world. It was power. Having money gives you choices. And because of that, I learned very early on to take care of the money I earned, and be cautious of how I spent it.

When I met my partner, we were both in college and broke. So we learned to get scrappy and get by with what little funds we had. Throughout it all, the subject of joining accounts never came up, and we were okay with that. We were both pretty honest about our financial situation from the start and I think we both knew it was too soon to merge finances, and neither of us was ever really comfortable with the idea. 

Over time, it’s natural for bigger and more important conversations to come up in a relationship: having children, buying a house, and managing money. Keeping finances separate — even within a marriage — should be normalized. Not everyone wants to completely merge finances. A 2019 survey from Magnify Money found that 28% of millennial couples say they keep their finances separate, compared to 11% of Gen Xers and 13% Baby Boomers. Younger generations are changing the way they manage money within their relationships. It’s important to be open and communicate with your significant other about whether opening a joint account is a good idea. After all, couples that talk about money end up happier for it in the long run. 

If you’re both ready to take that next step, you don’t have to wait as long as we did. But you should first ask yourself a few basic questions to make sure you’re truly in a place where it makes sense for you to do this.

1. How Would You Describe Both Of Your Spending Habits?

Do you know how much your partner spends on any given day? What about yourself? And more importantly, how much of this do you really know about each other? A 2019 survey from TD Bank showed that Millennials value financial openness in their relationships, with 31% saying they would consider breaking up with their partner if they discovered hidden debt or a bad credit score. 

What to try: Marcus by Goldman Sachs has created a financial personality quiz to help you uncover your financial personality. While a quiz certainly can’t answer all of your questions around how you interact with money, it’s a good place to start learning about yourself (and it was created in collaboration with Myers-Briggs). Finally, consider sitting down and having an open, honest conversation with your partner about money, how you spend it and why. 

Talking about money can be difficult for a lot of people. So before you two speak, you should both agree beforehand to create a space where you won’t judge the other person and will be completely honest with each other about your spending habits. This will allow you to open up and talk, and you both will be able to get a better sense of how you spend money, what habit(s) is/are problematic, and how you can work together to be a smarter spender before mixing finances.

2. Have You Planned Out And Agreed On A Budget?

The next step is to start thinking about budgets. Yes, plural. Most people think to make only one budget, which might work for most people, but not everyone. Maybe you’re supporting a family member and helping to manage their money in addition to your own. Or maybe you own your own business. There are many reasons why you’d need more than one budget.

What to try: First, both of you should agree that a budget is in order. Consider which budgeting strategy will work best for you based on your financial goals (pay down debt, curb spending, or build savings). If you’re new to budgeting and want to start simple, you can try the 50/30/20 method. This is when you allocate 50% of your income for necessities, 30% for discretionary spending, and 20% for savings goals or paying off debt. If you’re trying to minimize spending, try the envelope system, which is when you sort all of your expenses into categories and label an envelope for each category and fill it with the amount of cash you’ve allotted for that expense. This budgeting strategy can complement the 50/30/20 method, too. There are other budgeting strategies other than these two, so make sure you both do your research. And there are a lot of apps like You Need a Budget and/or Mint to get you on the right track.

3. Have You Shared Salaries With Each Other? 

Nearly one in five millennials don’t know what their partner makes, according to this 2018 report from Bank of America. If you’re among those who don’t know what your significant other makes, then you may want to hold off on merging your finances if you don’t even know that basic money information about your partner.

What to try: It’s simple: talk to each other. If one of you earns more than the other then you should think about how to split things so that the higher-earning person can pitch in a little more, which brings us to our next question.

4. Have You Both Agreed On How The Funds Will Be Used?

Why are you opening a joint account? Is the account meant to make paying bills easier? Is it intended for a long-term bigger goal (like home buying)? Do you also want to be able to both save up for vacations together? Having a joint account can make managing money easier, but make sure you both have a clear idea of what the money should be used for. That way, no one is surprised to see a large purchase for something that wasn’t agreed upon. Finally, make sure that you both agree on how much each of you will be depositing to the account each month. This is why asking about salary is important; it will determine how much you can — and should — add each month. 

What to try: Make sure you both agree what the funds in a joint account should be used for. Then, sit down and do the math to figure out how much you want to contribute. Make sure you plan out how exactly you’d be splitting the bills if that’s the route you want to go. Focus on percentages instead of dollar amounts to keep things fair. That means instead of both adding $1,000 into the account each month, you can choose to deposit 50% of your monthly pay instead. Let’s take an example, excluding taxes, to keep things simple: Person A makes $35,000 a year (which breaks down to $2,916 a month before taxes) and Person B makes $90,000 (which breaks down to $7,500 a month before taxes). In this example, $1,000 is 34% of Person A’s monthly take-home pay, whereas it’s only 13% of Person’s B monthly budget. That’s quite a disparity. 

So calculating how much each person contributes based on a percentage is a better way to go. If both people are depositing 50% of their monthly income into a joint account, that would mean Person A is depositing $1,458 and Person B is depositing $3,750 (again, we’re excluding taxes for simplicity). On the surface, it might seem like imbalanced, but it’s not. Both are basing their contributions based on how much they make. It keeps things truly fair. 

5. How Long Have You Been With Your partner?

This part is a little more subjective. Because how long is “long enough” to know you’re ready to combine finances? What one person might think is a long time might not necessarily be the case for someone else. So this part is really up to you. Do you think you’ve been with your partner long enough to know how they manage money and whether you’re comfortable enough to open a joint account together? Yes, you love them, but is this truly the next step for your relationship? Again, all of this is based on your intuition and how much you think you know about your partner. 

What to try: Check in with yourself. Do you feel pressured to open a joint account by your partner or family members? Or might you be pressuring the other person and not know it? Make sure both parties are on the same page on why you’re both considering this option. And when in doubt wait; you can always just hold off on opening an account and revisit it later on. 

Make sure you’ve been with them for long enough before opening a joint account with them. You can always set a milestone for your relationship (e.g., waiting until you’ve been together for a certain number of years) if you need somewhere to start.

6. Will You Keep Separate Accounts?

If you’ve both decided that opening a joint account is the right step for your finances, you have two options: You can go “all in” — or you can maintain your own separate accounts and deposit only a fraction of your income into your joint account. 

What to try: Try partially merging your finances first. That way, you both can maintain a degree of financial autonomy and see how it goes from there. If it works, then you can simply keep things that way. Or you can revisit your setup and determine if it would be more convenient to simply merge your money completely in a joint account. 

Everyone’s relationships — with money and with people — are different. So what works for one couple may not work for the other. And that’s OK. Just make sure to be open and honest with your loved one and keep the lines of communication open.

Jasmine Suarez is a journalist who writes about a number of topics, such as personal finance, health, culture, and relationships. 

Image via Unsplash

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