When my mother got married 54 years ago.  It was automatic.  You merged your finances and changed your name.  Now, with the high rate of relationship breakup, and wanting to remain ‘independent’ a lot of couples are opting to keep their name and their finances their own.

There are pro’s and con’s on both sides of the argument, so let’s look at a few, and this may help you decide whether or not to merge your finances.

When not to merge

  1. Don’t merge your finances until you know your partner’s full financial situation. If they come to the relationship with bad credit, or significant debt, this can affect your own and joint credit rating.  You need to know exactly what the situation is and have a plan on how to deal with it before you merge.
  2. Don’t merge your finances until you have set some boundaries around spending. If one of you is a spender and the other is a saver, and you merge your finances, resentment can build very quickly on both sides if you don’t have boundaries (ie a budget) in place.
  3. Don’t merge your finances until you have had the money conversation. We all have financial baggage.  Whether it comes from our parents, or past relationships, until you and your partner have worked through this, you may choose to not merge your finances completely. This process can take several years to work through.
  4. Definitely do not merge your finances if you partner has addictive behaviour.  This could be shopping, alcohol or other type of addiction. A relationship like this needs serious counselling to work through the addiction issues before you even contemplate sharing a bank account or credit card.

When do you merge your finances?

The easiest place to start is with a partial merge.  Once you have moved beyond the dating stage, and are contemplating setting up a home together.  Talk about money, and decide how you are going to pay the household bills.  The most common option at this stage is each of you contribute to a ‘bills’ account, and pay household running costs from there.  A bit like having a flat account.  The rest of your income is your own, and you pay all of your own lifestyle expenses and debt.

You can contribute 50/50 to this account.  Or if there is a significant income difference you may choose to contribute based on your income.

Many couples will stay in this partial merge for a number of years, and that is fine, you do whatever works for you.

When you are starting to think about major financial decisions like buying a home together and starting a family, you should have worked through the money behaviours.  You will know which of you is the spender or saver.  What each other’s financial situation and earnings are, and you will be setting joint financial goals.  Now is the time to start merging fully and use the power of combined thinking to achieve your goals.

It is, however, very important, and more so for women (according to Olivia Mellan, an expert on money and relationships) that you have some separate money.

The cynical say, women need to have separate money to protect themselves should the relationship fail.

Olivia Mellan on the other hand says it is important for women to have separate money to give them their own sense of identity.

Whatever the reason, both of you need to have ‘play money’ of your own that you can do what you like with.  How much that is will depend on your own circumstances.  What you include will depend on how you define ‘play money’.

The key message is, don’t feel you have to combine your finances as soon as you have enter into a long term relationship.  There are stepping stones along the way.

Just because you are getting married doesn’t mean you have to give up your own bank account straight away.

If you would like to know more about whether or not  to merge your finances, please contact us, for more information, or check our events page for our upcoming workshops.