In my last post we covered how you can start the money conversation with a partner. Here, we’ll be continuing along those same lines of money and relationships and answering another part of the reader’s question that came in.
To merge or not to merge; that is the question. Or is it?
When we talk about merging finances, it can seem like it’s a black-and-white or all-or-nothing type of question. In reality, the decision to merge finances (or not merge) with a partner can be as nuanced as you want.
You can start slow and merge things based on what makes sense for your relationship and the comfort level of all parties involved.
When you get to a certain point in your relationship, it makes sense to begin asking each other how you feel about combining your finances. Even if you’re someone who doesn’t want to join finances until you’re married, it’s good to have conversations about when and how you would want to merge your finances once you start seriously building a life together.
These decisions are super personal, require a lot of trust, and should be founded on shared priorities and goals.
Like I mentioned before, combining your finances exists on a spectrum and you and your partner can tailor it to your needs, goals, and comfort at a given time and adapt as necessary.
Levels of Financial Merging
Level 1: Merge the Basics
Many couples move in together before getting married (if they ever get married) and may share a lot of expenses. If this is the case it might make sense (and simplify things) to open a shared checking account that you each contribute a set amount of money to each month to cover your basic bills such as rent, utilities, and groceries.
This can make things a little easier and doesn’t require Venmo-ing each other back and forth throughout the month or needing someone to front money before a transfer clears. It can also be a great way to test the waters of merged finances and build up some of that trust.
Level 2: Merge on Goals
If you talked about shared priorities and goals you have as a couple during your initial money conversation, this can also be a great opportunity to test out some of the benefits of and how you feel about shared finances.
Determine a financial goal for yourselves as a couple based on your priorities — it could be a saving up for a great vacation (you know, when we can travel again), a down payment on a house, or anything else you can dream up.
Open a high-interest joint savings account and each commit to transferring a certain amount out of each paycheck to it. It could be $10 per month or $300 per month — the important thing is that you’re working together as a team towards making one of your dreams a reality.
It can be fun to watch how by joining forces you’re able to reach your goal more quickly. Plus, you can hold each other accountable for your savings goals.
Level 3: Yours, Mine, and Ours
Many couples take the “yours, mine, and ours” approach to merging finances. This means they might have a joint checking and savings account, share some assets such as a home or car, but also keep their own personal checking and savings accounts.
Each month they’ll transfer most of their income to their joint accounts to cover bills and joint savings goals, but keep some in their personal accounts to cover any personal “fun money” and add to their personal savings.
This can be a great way for couples to still maintain some financial autonomy while also working together on financial goals and simplifying their joint expenses.
Level 4: The Full Merge
And then, of course, there’s The Full Merge. This is where you combine all of your finances, close all personal accounts, and add each other as authorized users to all credit cards. Plenty of couples do this, and it works well for many, but it’s not a choice to be entered into lightly (although, to be fair, none of these are).
If you’re in a healthy, long-term, committed relationship and you have a clear shared vision of the life you want and are actively working towards this together, then go for it.
But please, don’t think you have to go zero to full merge. There are plenty of other options that can help you test things out and build your comfort with sharing finances and shared financial responsibility. You may decide that you never want to fully merge your money, and that’s okay. Your decision is your own, so do what feels best for you and your relationship.
Cassie and I are currently in the “yours, mine, and ours” stage and will probably keep it this way for the foreseeable future. We’ve recently moved more and more into the “ours” category. This works for us now, but I can also see a future where we step closer to the Full Merge realm — between the two of us, we have a truly ridiculous number of accounts and could definitely benefit from some consolidating.
It’s important to figure out what works best for you as a couple, and you may disagree about this at first. One person may be super excited to financially commit in this way and the other may be a bit more hesitant, and that’s okay. Don’t take it personally.
Have a conversation with your partner and try to better understand where they’re coming from. The reason probably has nothing to do with you, and with the right communication, they may start to understand your point of view better as well. At the same time, if they aren’t comfortable, don’t pressure them. Maintaining financial independence is really important for many people and our personal money scripts heavily influence that.
There are plenty of reasons to merge your finances. Like I’ve said, it can greatly simplify things, help you and your partner feel on the same team as you tackle your financial goals, and help build and solidify trust. But the logistics and efficiency aren’t a good enough reason to do it.
You should feel good and comfortable with the decision, not riddled with anxiety.
If you decide to merge your finances in some way, make sure to have a conversation of what exactly that will mean and look like. Decide where you want to open your joint accounts, how much you’re each agreeing to contribute to the joint accounts each month, and what expenses will be paid from these accounts.
Then set aside a time to sit down together and make it happen, open your new accounts, close any old accounts you won’t be using anymore, and perhaps update beneficiary information on investment or retirement accounts and life insurance policies – whatever it is you’ve decided to do.
Of course, there’s also the difference between legally merging your finances and simply merging your finances in day-to-day practice. If you don’t want to legally merge your finances but are splitting expenses and bills and think it’s time to start budgeting together, my next article will offer some helpful advice for budgeting as a couple without leading to arguments or resentment.