There comes a point in every serious relationship when big decisions need to be made. Some are easier than others. Moving in together is usually a time for optimism and excitement, for example. However, discussions about money tend to be a little more tricky.
There are plenty of things to think about when it comes to managing your money to avoid misunderstanding and arguments. The most important is whether you should manage your finances jointly or separately. The truth is, however, there’s no right or wrong answer to this, and many different factors—from debt level to credit scores—must be considered.
In this guide, we explore what can happen to your finances when you enter into a serious relationship, answer a range of common questions on this topic, and provide some food for thought to help you make the right choice for you and your partner.
How to manage money as a couple
Typically speaking, couples can manage their finances in a few ways. You can opt to either keep your finances totally separate, combine your money using joint accounts, or do a mix of both. Below we take a look at the pros and cons of these different methods.
Should couples have separate finances?
When it comes to managing money in a relationship, the question of whether to keep finances separate or merge them can be complex. It’s important to weigh factors such as individual financial habits, debt levels, the current (or past) use of debt management solutions and credit scores before making a decision.
Keeping finances separate allows each partner to maintain autonomy and financial independence, which can prevent conflicts over spending habits from occurring. It can also protect individual credit scores. This can be significant if your partner has a poor credit report or a large amount of debt you may not know about. On the other hand, managing finances separately can lead to difficulties in splitting joint expenses evenly and can create challenges in long-term financial planning and goal-setting as a couple.
Should couples have a joint bank account?
Once again, before taking the big decision to combine the ways in which you manage your finances—or to specifically open a joint bank account—it’s essential to consider a number of variables. For example, if your partner has totally different spending habits to you or if you’re aware they have had issues with overreaching or gambling in the past, a joint bank account may not be the best idea.
That being said, if you and your partner are on the same page and are open about your individual financial situations before taking the plunge, joint bank accounts can be a really helpful tool. They can streamline the way you manage your money and help to build a strong sense of shared responsibility. However, it should go without saying that they also require a high level of trust and communication from both parties.
Managing finances as a couple: things to consider
As mentioned above, there’s no one-size-fits-all approach when it comes to managing finances as a couple. What works well for one couple, might not work at all for another. However, to help you make the best decisions for you and your partner, here are some things worth thinking about.
- Understand each other’s approach towards money. Are you spenders or savers or do you have completely different attitudes? Communication and compromise will be key to finding the right way forward.
- Does one of you have a poor credit rating? Living with someone with a low credit score won’t affect yours unless you choose to open a joint bank account. This means you will be co-scored for future credit – i.e. a mortgage or bank loan.
- If you’re going to have a joint bank account and manage finances together, trust is important. You’ll both be responsible for any debts or overdrafts. If one of you keeps cranking these up, cracks will quickly start to appear.
- Be clear on how the money in the joint account will be used. It might be worth considering having a set allowance each week or month, once all the necessary bills have been paid. This way, you both retain independence and don’t have to seek permission to buy something.
- Don’t leave one of you to act as accountant. Take joint responsibility for the finances. You might not be good at figures or have an interest in balancing the books, but it’s unfair to lay the burden on one person as resentment is likely to kick in on both sides.
- Have regular discussions about your joint money situation so there are no sudden surprises. This means you’ll both be more likely to support each other when finances are tight.
- If you decide to keep your finances separate, you’ll need to decide very early on how to split the bills. If one earns considerably more than the other, 50-50 might not be deemed fair. Plan everything out and don’t take it for granted that one of you will be responsible for the lion’s share.
- The best of both worlds can be a good option – splitting all your finances up into ‘Ours/Yours/Mine’ pots, so some of your money is managed jointly but you still retain autonomy too. Decide what is and isn’t going to be paid from the joint account.
- If one of you isn’t earning, or earning very little, you could choose to keep separate accounts, but the main earner pays the partner an allowance. This is likely to be the most complex of situations, as it could lead to a shift in feelings of equality in the relationship.
- In the early days, it’s probably wise to keep any savings separate. Credit cards too are always best managed independently.
Deciding to share an account is a big decision. It might not be romantic, but it could be a good idea to test the water before fully committing. Consider opening a joint account in which both people deposit an agreed amount each month to pay certain joint bills.
If the situation works well, you can steadily increase how much is paid into the account and share more of the responsibility. No fuss – and no fallouts.
