To Combine or Not to Combine: The Money Dilemma in Relationships

Money can be a source of tension in relationships. That’s probably why money is one of the leading causes of divorce in the U.S. Unfortunately, there’s no escaping money in a relationship, and one of the earliest decisions couples face is how to manage their finances. Should they keep their money separate or combine it? It’s a question I answer with my famous or infamous “it depends” as each couple’s situation, values, and dynamics are unique. Let’s explore the pros and cons of both approaches.

Keeping Money Separate

• Freedom and Autonomy: For some, financial independence is paramount. Keeping money separate allows each partner to maintain a sense of autonomy over their finances. They can spend or save according to their priorities without needing to consult the other.
• Transparency: While it might seem counterintuitive, keeping finances separate can sometimes lead to more transparency. Each partner has a clear view of their financial situation without needing to dive into the other’s spending habits.
• Protecting Assets: I know people don’t want to go into a relationship thinking this way, but in cases of divorce or separation, having separate finances can protect individual assets. It simplifies the process of dividing assets and can prevent conflicts over money during a breakup.

Combining Finances

• Unified Goals: Combining finances can foster a sense of unity and shared responsibility. It allows couples to work together towards common financial goals, such as saving for a house, retirement, or vacations.
• Simplified Management: Managing joint finances can be more straightforward. There’s only one set of accounts to monitor, bills to pay, and budgets to follow. This can reduce the administrative burden and potential conflicts over financial responsibilities.
• Building Trust: Sharing finances requires a significant level of trust. It demonstrates a commitment to openness and honesty in the relationship. Couples who successfully manage joint finances often report higher levels of trust and satisfaction.

Finding the Middle Ground

• Hybrid Approach: Some couples find a middle ground by maintaining both joint and separate accounts. They might contribute a portion of their income to a joint account for shared expenses while keeping the remainder in individual accounts. In practice, it’s probably best to have one person “in charge” of the joint account to ensure all the bills are paid on time.

Anecdotal Observations

• Regular Communication: Regardless of whether couples choose to combine finances or keep them separate, open communication is key. Regular discussions about financial goals, spending habits, and concerns can help prevent misunderstandings and conflicts.
• Respecting Differences: Every individual has their own relationship with money shaped by their upbringing, experiences, and values. It’s important for couples to respect and understand each other’s perspectives, even if they differ.

The question I get 99% of the time when this topic comes up is, “What do you do?” My husband and I use the hybrid approach. Our financial plan tells us how much we need to save for our common financial goals (home purchase, travel, retirement, etc.), then we each put our share into our joint savings / checking / investment accounts, and we can do what we please with what is left over. We update our financial plan and savings numbers each year. We’re celebrating our 17th wedding anniversary in September and have never fought about money… don’t worry; we certainly fight about other things.

Ultimately, there’s no right or wrong way to manage finances in a relationship. What works for one couple may not work for another. The key is to find an approach that aligns with the values, goals, and dynamics of the relationship. Whether keeping money separate or combining it, the most important thing is to approach finances with honesty, transparency, and mutual respect. After all, a healthy relationship is built on so much more than just money.