Thinking About Combining Your Finances? 9 Things to Think About

Like with most things in the personal finance world, there is no one size fits all answer to the question: Should we combine finances? You have to do what works for you and make adjustments as you go. The answer could be no, never, or it could be when you hit a specific life milestone.

My biggest piece of advice is IF you decide to combine, include some personal money for each of you in the budget. Money that you can spend on whatever the hell you want, whenever you want. This works really well for savers and spenders! For the savers, it allows you to spend on yourself without feeling guilty (and to actually spend on yourself!), and for spenders, it gives you spending limits so that you can still spend, but you’re not going to derail your joint financial goals! We used to use cash for this but now we use automatic transfers on payday to individual accounts. These accounts have debit Mastercards so we can use it for online purchases too which is really handy.

Here are some things for you to think about when you are making this decision.

What is our individual debt load? And how do we each feel about it? You can still combine if one partner has debt and the other doesn’t, if you are on the same page about how much of a priority it is to pay it off.

How do we each manage our money? If one person flies by the seat of their pants and lives paycheck to paycheck and the other has a 10 year plan, this could add strain to the relationship. Different money management styles are not a deal breaker as long as you have a plan for how to merge the two different styles if you decide to combine.

Are you each comfortable with the other's financial situation? If you haven’t had conversations about where each of you stand, there is a lot to talk about before thinking about combining.

Who will manage the money if you combine? Not sorting this out beforehand will cause you so much headache down the road. Will one of you be the main money manager or will you sit down and pay all of the bills together?

What does combining look like to us? Will we use a new account or transition one of our current accounts to a joint account? Will we each keep our own accounts in addition to the joint account?

What about credit cards? Do we combine these as well or each keep an individual card? (Note: While it might be easier to use one joint credit card, consider each keeping an individual card that you use regularly to maintain your credit ratings. Having a bill or two go onto each card every month is a great way to keep them active.)

How will you manage the finances if you combine? You know I’m a sucker for a spreadsheet, but I know that doesn’t work for everyone. Talk about which methods you are each currently using and decide what is going to make the most sense to move forward with.

The MOST IMPORTANT thing to remember is that if something isn’t working, you can change it. Don’t be afraid to try something new, but don’t be afraid to make adjustments as you go.

It doesn’t have to be ALL or NOTHING. If fully combining doesn’t feel right for you, but managing everything separately is not working either, consider a halfway point. You each have your own individual accounts but you have a joint household account that you pay for all joint expenses out of. You can each contribute a specific amount or a % of your incomes.

Some major life events when it is a good time to start or re-evaluate how you are managing your finances.

Moving in together.

Joint home purchase.

Marriage.

Birth of child.

I know you didn’t ask, but because it’s my blog and I’ll share what I want to, here are our details!!

We combined as soon as we moved in together. We moved into a home that we bought together, so it made sense to us. I don’t actually remember any conversations around it, which was obviously not ideal, but I feel like we had to have talked about it. Honestly, there is so much I don’t remember from that time, and I think it is really because we didn’t really know what we were doing. Within the first year or two of buying, we had to replace the furnace and water heater. I don’t remember how we paid for it, but I am sure it went on a credit card.

I am the main money manager (shocker) for our household. I pay all of the bills and manage the day to day. When things change with our finances (like bonuses, raises or large expenses) we have conversations around how to move forward. This works very well for us because I love all of the financial tasks and my hubby loves not having to do them. :)

If you’ve decided that combining is the way you want to go, stay tuned next week for the steps on HOW to do it without feeling like a hot mess!!

-Sherry