When you make the choice to share a life with someone, you end up combining many things: your dishes, the contents of your medicine cabinets, your pets. These actions require some gentle compromise — whose glassware stays and whose goes, for instance. But when you're planning to combine your finances, things can get a little tricky. Smooth the process of merging money with your partner by avoiding these mistakes.
Combining too soon
The “right time” to merge finances is entirely up to you, but if you do so without discussing some crucial ground rules, you may be jumping the gun.
First things first, decide just how much you and your partner will be sharing to begin with. Some couples go all-in and combine everything, while others maintain a joint account for shared expenses and individual accounts for personal ones. If you choose the second route, establish whether you’ll be contributing toward expenses 50/50, or if by share of earning power is a better fit.
Before transferring any funds, you’ll also want to write out an agreement about how shared finances will be separated in the event of a break-up, suggests clinical psychologist and author Dr. Carla Marie Manly. By having a record and designating whether you’d split joint accounts based on income percentage or down the middle, etc., you'll head off problems should the relationship end.
While not every couple plans to get married, the institution of marriage does provide financial protection — and legal recourse — if you combine finances. For this reason, clinical psychologist and relationship blogger Dr. Carissa Coulston suggests waiting until you've officially tied the knot. "If you and your partner separate before the wedding takes place and you’ve combined all your funds into a single account, you could end up losing everything if your ex-partner spends every penny and leaves you high and dry," she says.
Not designating shared vs. personal expenses
Make sure you and your partner are on the same page about what should be paid for from a joint account and what should be come from your separate accounts. This can get tricky when you're buying items for the home you share that one of you thinks you really need — but only one of you actually wants (replacing faded bath towels, splurging on high-end bath products or acquiring a fancy cooking gadget, to name a few).
Coulston suggests asking the following questions to determine what’s personal and what’s shared: Is the expense something that both of you need equally? Is it something you both can’t manage without? If the answer to either of those questions is no, then it's probably a personal expense, she says.
"Sharing is an important part of any relationship, but spending joint money on personal expenses could end up looking like you’re taking advantage of your partner," she adds. "They may begin to feel used and even cheated. And eventually that kind of resentment is going to cause a major disruption."
Set aside a specific time for meetings on important issues like finances — ideally a weekend morning when stress is low and attention is high.
Failing to establish spending and saving goals
Setting up joint accounts without planning for major goals can cause trouble if your money objectives don't match — if, say, you'd like to save for a home within the next year but your partner would prefer to use extra money for vacations.
Have candid conversations with your partner. "Set aside a specific time for meetings on important issues like finances — ideally a weekend morning when stress is low and attention is high," Manly says. If you find that one of you is more of a spender and the other is more of a saver, use that as an opportunity to practice working together as a team.
"Take a collaborative approach to negotiate an ideal money plan," she advises. "The saver might be honored by having a long-term saving plan adopted, while the spender might feel honored knowing that every month a certain sum has been allotted to fun purchases."
Hiding bad habits or keeping secrets
Keeping secrets isn’t good for a relationship. If you and your partner have different financial habits, it can be tempting to hide away extra spending (or saving) money. Similarly, if you have a great deal of debt, coming clean to your partner can be difficult.
But not disclosing the truth is far more damaging.
"Financial secrets take an added toll due to the effect they have on a sense of both physical and emotional security," Manly explains. For example, if one person secretly spends so much money that the habit impacts their ability to make the mortgage payment, this will affect both emotional safety (feelings of betrayal) and literal safety (secure housing) for their partner.
Not being on the same page about helping others
Couples should address their plan of action if (and when) a friend or family member asks for financial assistance.
"Not doing this can create resentment, can present the opportunity to keep secrets about loans or monetary gifts to relatives, and can violate an otherwise healthy, comprehensive trust that the couple have built," says author Byron Tully.
Given that it’s possible loans to family members and friends may never be repaid, deciding how to handle requests in advance can prevent major conflict.