Before we begin, I wanted to thank everyone who’s submitted for our soon-to-launch series, Meal Plan. I’m always blown away by how generous Purse readers are, and I’m excited to publish the first edition!
When I wrote about the most expensive year of my life, I was caught off guard by a comment asking why my husband, Chris, and I hadn’t combined our finances yet. Currently, we share a credit card, have a joint savings account, split pretty much all expenses down the middle, and have had many discussions about our future goals and priorities. Neither of us has any debt, and we came into our marriage with roughly equal assets and incomes.
To me, a shared credit card, joint savings, discussions about future goals, and transparency about balances made it seem like our finances were combined. But we still have separate bank and investment accounts, and we operate under what I’d consider “Chris’s money” and “Alicia’s money” mentalities. I still mainly budget only my own paychecks for things like savings and bill pay.
I’ve been reflecting on why I’ve been so hesitant to have both of our incomes deposited into a single account, which arguably makes more sense (and would take less time) than our current system where we Venmo each other for shared bills that we individually handle at the end of each month. We’re building wealth together now, after all, and splitting all of our monthly expenses equally. And when we (hopefully) have a baby, operating from one shared pot of money makes the most sense.
My best explanation is that I’ve been independent for a long time, and I like it that way. Before I met Chris, I worked and lived on my own for almost a decade, and I never had to answer to anyone but myself. And, despite occasionally writing personal stories for a large audience, I don’t necessarily like people knowing my business. The idea that someone else has knowledge of every single thing I spend money on—despite none of it being at all out of the ordinary—is kind of my nightmare. I also firmly believe that all women need to have their own money separate from any partner.
But it’s also important to me that Chris and I build a true partnership and have equal insight into and buy-in to our finances and goals. Plus, he’s a lot better at saving than I am, so I should take advantage of that.
Zooming out, I don’t think I’m alone in feeling conflicted about merging my money with my partner. If you’ll allow me to paint with a broad brush, with Americans marrying later in life than they used to, and younger generations of women being more likely to have their own careers, incomes, and savings (and maybe even homes and other assets), it’s fair to say that combining finances is a little more complicated than it may have been for older generations.
Or at least, there may be a few more steps we need to take to fully integrate spending, saving, investing, and other goals. And maybe a few more mental hurdles to overcome, too.
Advice for combining finances
But those are all excuses, and Chris and I agree it makes sense to more fully combine our finances. So I talked with Stephanie Nanney, certified financial planner and partner at Private Vista, about our situation and what she’s seen her clients do when it comes to combining finances.
As with everything related to personal finance, the exact system each couple settles on will vary depending on their own individual and joint needs. But to kickstart the conversation, Nanney suggests each partner disclose their income, assets, and debts, and then discuss short-, medium-, and long-term financial goals, which Chris and I have already done.
That said, we do need to get on the same page about some everyday spending goals. My recent story on dining-out budgets sparked a somewhat tense conversation about how much we’re spending on groceries. I want to trim spending there; Chris is not as concerned. At the same time, I spend more on clothes and other miscellaneous shopping, which isn’t a priority for Chris. (But to be clear: He doesn’t have a problem with my spending in this category.)
Once you’ve discussed your budget and goals, then, generally speaking, there are a few ways couples can combine finances, according to Nanney:
- Completely joint: All income is deposited into a joint checking account; that money is then disbursed to pay for bills and to put into joint savings and individual retirement accounts. Each partner is listed on every account.
- Partially joint: Each partner maintains their own checking account but contributes a set amount to a joint account for paying bills. The amount will differ depending on each couple; some might split bills 50-50 while others might do so based on a percentage of income.
- Separate: Keep separate accounts and budgets based on your individual spending.
Combining everything can often be easier to manage for many couples, says Nanney, and it can be beneficial when one partner tends to be “non-financial,” which is pretty common. (It’s probably no surprise that in our household, Chris is much less interested in the minutiae of our budget and investments than I am.)
As long as both partners know where all of the accounts are located and what your shared goals are, and both have access to everything, it’s okay for one of you to take a more hands-off approach to budgeting and bill management, as long as you both agree to that arrangement.
“It can be complicated to have two different people paying bills,” says Nanney. “And just like everything else, it’s not always equal. Like, I do zero cooking in my household, and my husband does zero finance.”
Ultimately, the success of whichever approach you settle on relies on constant communication, says Nanney. As long as you are hitting the savings and other goals you set together, having joint finances should allow for more flexibility in your spending. If your partner uses joint expenses as a way to control your spending, that’s a red flag.
Embrace flexibility
Speaking of communication, when I talked to Chris about writing about our efforts to combine our finances, he confirmed we have been “tiptoeing into it” and then said something that surprised me. “I feel like we’ve been waiting for me to get a full-time job to fully integrate,” he said. Chris runs his own graphic design and animation studio but is looking for something that offers benefits now that I am also freelancing full time.
I was struck by this because I thought we were waiting for my income to level out post-layoff before fully combining everything. It seems we’ve both been blaming ourselves for not being more proactive. And maybe we’re both feeling inadequate with our current financial situations. I’d be lying if I said going from earning a reliable salary with benefits to freelancing hasn’t shaken my confidence a bit, and it made me a little embarrassed to combine finances when I’m not necessarily contributing as much as I once would have been able to.
When I relayed this to Nanney, she said it’s usually more complicated to plan for the future when both partners have variable income. In that case, it can make sense to consider your goals from a longer time horizon, rather than the more typical month by month. That way if one partner doesn’t earn much in one month, it’s not a huge deal.
“In the month of May, maybe you can't save any money, but in June, July, and August, that’s where you can save,” says Nanney. “Having to think about it on a full-year basis can help. And if that’s too long, take it in six-month chunks. In these six months, can we save $X?”
Thinking about your income in six- or 12-month segments can also help ease spending guilt, says Nanney. For example, one partner might have a slow month right before a planned vacation or big expense. But if you have a longer outlook, you can contextualize your spending within it and feel better about still taking the trip or making the purchase.
As the years progress—and so too do your careers, salaries, and other life factors—you can reassess your priorities and how you tackle different goals. For example, you might schedule a monthly money meeting now but realize in a few years that it’s no longer necessary, and switch it to a quarterly meeting or even annual.
What accounts can be combined
For those who want to have fully combined finances, Nanney recommends having one primary checking account for bill pay as well as a joint savings. When your finances are ready—meaning you’re meeting your other savings goals and have a surplus of cash each month—you can also add on a joint taxable brokerage account.
Retirement accounts are kept separate by design; however, you can consolidate all of your own personal retirement accounts to streamline your finances. (So each partner could have an IRA, a Roth, and potentially a workplace account if offered.)
Thinking through these options, it seems likely Chris and I will open a joint checking to handle bill pay, to add to our joint savings. But I feel more comfortable keeping our separate savings accounts separate, at least for now, as well as separate credit cards we can use for individual purchases we don’t need to run by the other. Going forward, we can prioritize putting money toward our joint goals, while keeping our own personal savings cushions.
Resources
Here are some resources I found helpful while researching! Feel free to comment yours:
- The Joint Account: Friends of The Purse Heather and Doug Boneparth offer a wealth of info for couples at all stages.
- Money for Couples with Ramit Sethi: I don’t love most personal finance personalities or podcasts, but I’ve interviewed Ramit a few times over the years, and I think he does a great job. Given some of the problems these couples have, I think my goal is to not end up on his podcast. Lol.
- This is a great piece in The Wall Street Journal (featuring Heather and Doug) about why it’s important for both partners to have access to all of the financial accounts and how to go about it. (And another great WSJ story about what can happen when one partner doesn’t know anything about the finances.) But like many of the commenters pointed out, I wouldn’t share your financial info in a public place like the featured couple did!
- Money with Katie has a great look at how she and her husband combined finances.
Also published this week
We’re talking February spending:
Alicia Adamczyk
And we shared photos of our relaunch party!
Lindsey Stanberry
