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Should I Combine Expenses with My Partner?

Is it a good idea to combine finances with my partner?

Discussing money is one of the issues can lead to stress in even the strongest, happiest couple. If you’re wondering whether combining finances with your partner makes sense, it’s important that you’re both prepared to work as a team and communicate. We’ll walk you through what it means to combine your accounts or keep them separate below.

Should you combine accounts?

If you and your partner are both savers, combining accounts might work out well. If the two of you purchase a home, have children, get married, or if one of you can’t or chooses not to work, a combined checking account will enable you to keep all of your joint expenses in one place. Once you have the joint account, you can then determine how you’ll each contribute to that joint account to cover shared expenses, like your mortgage/rent, groceries, utilities, childcare, etc.
Be aware of the details when opening joint accounts. Legally, Jim AND Mary is very different from Jim OR Mary. If both names on the account are linked by “AND,” all account activities will require the consent of both parties. Having both names on the account linked by “OR” is convenient because it lets either of you handle transactions. This is especially helpful if one of you travels more than the other. It does, however, enable Jim OR Mary to withdraw all the money and move to Paris, leaving their partner with a zero balance.
A joint savings account can keep you both focused and consistently saving for a new vehicle, major renovations to your home, or paying down a debt.
If you’re engaged, it’s best to wait until you’re married and any planned name changes are completed before combining accounts. That way, you’ll avoid the headache of needing to update your personal information right after the wedding.

Should you keep accounts separate?

Separate accounts let you maintain a degree of privacy. They make it easy for you and your partner to divide and conquer. One of you pays the mortgage, the other pays all the utilities, or whatever seems to be proportionally fair based on the income each partner generates.
Credit cards should generally be kept separate. If one of you creates bad credit on an individual account, it will only affect that person’s credit score. So, when the two of you need a loan, the partner with the better credit can apply and receive a better rate.
Retirement accounts have to be kept separate. If one of you isn’t employed, but you’re married, the non-working spouse can open a “spousal IRA” and contributions can continue to be made. While retirement may seem a long way off, it’s continual contributions that will build your account.

The best of both worlds

You can always have a combination of combined and separate accounts. Just keep in mind that more accounts will require keeping track of more balances and maintaining more minimum balances.

Communicate, or separate

It’s not all black and white when it comes to managing the green. You need to understand your partner’s motivations for spending and saving. What may be extravagant or irresponsible to you may seem necessary or to be a good value to them.
Money is like any other relationship issue. Honest, mature communication is the key. Get to know what drives your partner’s money habits. Discuss your concerns and determine numbers that are acceptable to both of you. Establish a dollar amount limit that can be spent without consulting each other. Remember, the only right financial solution is the one that’s right for your relationship.
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