How to Combine Your Finances as a Couple:
Money can be a complicated subject; it is a very important topic to tackle if you combine your finances as a couple. One common area of tension is whether to merge your bank accounts and debt, and above all, whether to take on shared expenses. Combining finances takes compromise, planning, and uncomfortable conversations, in order to build a strong foundation for your future together.
The best way to combine finances as a couple is a significant and delicate transition, but above all, it isn’t risking everything. Some couples combine every account, from retirement funds, credit cards, and home budgets. Others keep separate funds for paying bills or taking an annual vacation, if that is the case. However, there’s no wrong way to customize your finances.
The Proportional Method
Couples who combine finances use the proportional method to contribute into the household bills at a rate that’s proportional to their income.
For example, if one spouse earns $2,000 per month and the other earns $4,000 per month, that is 33% and 66% of the total household income. The couple spends $3,000 on their monthly bills, including their mortgage, utilities, and groceries, with one-twelfth of their annual expenses toward property taxes. One pays 33% of their $3,000 monthly bills which equals $1,000; the other pays 66%, which equals $2,000.
| Advantage | Disadvantage |
| Neither partner feels the pressure to keep budget down to the earnings of the other partner. | A high-income partner feels being penalized for earning more. |
The Raw Contribution Method
To combine finances as a couple, those who use the raw contribution method chip in, regardless of how much they make.
| Advantage | Disadvantage |
| High income partner doesn’t feel penalized for their success. | Their relationship could become strained if one partner lives more lavishly than the other. |
| The lower-earning partner doesn’t feel subsidized. | Some couples also criticize this method as feeling too “roommate-like”. |
Complete Combination
Couples who completely combine their finances, including bank accounts, pay all bills from joint credit or debit cards, and cooperate on retirement investments. For example, if Devon earns $3,700 a month; Hilary earns $2,600 with both paychecks being deposited into a joint checking account. Therefore, they use the same joint account for all of their purchases, regardless of whether it’s a household purchase or an individual purchase.
| Advantage | Disadvantage |
| Unite as “we” rather than “you” and “me.” Record-keeping also becomes easier. | The higher-earning partner can resent the lower-earning partner for spending his or her earnings. |
| If one person’s income rises or the other person’s income falls, they will balance one another. | If one person tends to be a spender while the other tends to be frugal, there could be an imbalance. |
Conclusion
There’s no single best practice for combining your finances as a couple. Moreover, the most important idea is there are options. Therefore, you can fulfill your collective needs. Of course, after that, there needs to be an agreement about what to do if one partner loses their job. You need to experiment with different strategies between your individual money and your combined finances. Weigh the pros and cons and decide which method feels most natural.
