February 6, 2024

Few topics cause as much tension in relationships as differing views on how to handle money as a team. So, before opening a joint account or credit card, discussing money expectations, habits, and goals could ensure you're both on the same page. Here are a few things you should know prior to merging financial accounts. 

Advantages of Combining Finances

  • Financial clarity

Managing your money together rather than separately could put you on the same financial page, resulting in fewer arguments about spending and saving. Sharing bank accounts may also foster increased trust within the relationship.

  • Faster goal achievement

Merging finances could reduce the time it takes to reach specific financial goals. For instance, couples who combine their incomes and expenses may find they can save for a down payment on a house at a much faster rate than if they were managing their finances separately.

  • Greater security

Combining incomes provides a financial safety net for unexpected events. Should one partner need to take time off for family care, the other's income can help sustain household expenses.

Disadvantages of Combining Finances

  • Loss of individual financial identity

A partner may feel less independence, potentially leading to resentment that can strain the relationship.

  • Less privacy

If you share finances, your partner may have a full view of your account activity. Questions or perceived judgment about spending habits could lead to arguments.

  • Separating accounts can be complex

If you break up or get a divorce, dividing finances can be complicated and contentious. It can also lead to financial losses if one partner has not been as financially responsible.

Questions Couples Should Ask Before Combining Finances

A candid conversation about financial goals and spending behavior is vital in deciding whether and how to merge accounts. Here are a few questions to start the conversation.

“When do you want to retire?”

Asking this question helps set clear savings targets. It also aids in determining how much you want to save annually, as well as choosing investment options that support those goals.

“How can we share financial responsibilities in a way that’s fair to both of us?”

If one partner earns significantly less than the other or carries a large amount of pre-existing debt, deciding how much each should contribute can be tricky. Establish a fair and transparent system so different income levels contribute proportionately to shared household costs.

For example, if one person earns 70% of the total income and the other earns 30%, they would pay the same percentages of each bill. This method is more equitable in terms of spending power.

“Do you have assets or debt I don’t know about?”

Being honest is crucial to understanding where changes may be needed, allowing you to achieve your financial goals or avoid potential money problems. Sharing such details with your partner lets you get a complete picture of what life might be like if you share financial accounts.

While combining finances can signify greater relationship commitment, it’s not without risk. Whether you’re already married or have yet to tie the knot, consider how merging your money could affect your relationship and your bank account.

Get in touch with a trusted HawaiiUSA representative to get personalized advice!