She Strengthens

Merging Finances: Is It Right for You and Your Partner?

The Decision to Merge: A Personal Story

I recently made the decision to merge finances with my partner of 11 years. We didn’t fully combine our accounts, but rather created a joint account for shared expenses. This decision was driven by convenience, as we’ve been living together for several years. Growing up in a paycheck-to-paycheck household taught me the importance of being mindful of my spending and budgeting. When I met my partner, we were both broke college students, and we learned to be resourceful with our limited funds.

The Importance of Open Communication

As our relationship progressed, we began to have more in-depth conversations about our financial goals and values. Keeping finances separate, even within a marriage, should be normalized. A 2019 survey from Magnify Money found that 28% of millennial couples maintain separate finances, compared to 11% of Gen Xers and 13% of Baby Boomers. Younger generations are redefining how they manage money within their relationships.

Before Merging Finances: Ask Yourself These Questions

If you’re considering merging finances with your partner, ask yourself these essential questions:

1. What Are Your Spending Habits?

Do you know how much your partner spends daily? What about yourself? A 2019 survey from TD Bank revealed that 31% of millennials would consider breaking up with their partner if they discovered hidden debt or a bad credit score. Take a financial personality quiz, like the one offered by Marcus by Goldman Sachs, to better understand your spending habits. Have an open and honest conversation with your partner about your financial values and goals.

2. Do You Have a Budget in Place?

Develop a budget that works for both of you. Consider multiple budgets if necessary, such as for supporting a family member or managing a business. Research budgeting strategies, like the 50/30/20 method or the envelope system, and utilize apps like You Need a Budget or Mint to track your expenses.

3. Have You Shared Salaries?

Nearly one in five millennials don’t know their partner’s salary, according to a 2018 report from Bank of America. Share your salaries to ensure a clear understanding of your financial situation.

4. How Will You Use the Joint Account?

Define the purpose of your joint account. Is it for bill payments, long-term savings, or vacations? Determine how much each person will contribute based on their income percentage.

5. How Long Have You Been Together?

Consider the length of your relationship before merging finances. Ask yourself if you’re truly ready to take this step.

6. Will You Maintain Separate Accounts?

You can choose to partially merge your finances or maintain separate accounts. Try partially merging first to test the waters.

Ultimately, Communication Is Key

Merging finances is a personal decision that requires open communication and mutual understanding. Be honest with your partner, and prioritize financial transparency to ensure a harmonious and successful financial partnership.