Should You Combine Finances Before Marriage?
Should you combine finances before marriage?
Should you combine finances before marriage?
Tori Dunlap is a millennial money and career blogger. After saving $100,000 at age 25, Tori founded Her First $100K to fight financial inequality by giving women actionable resources to better their money. A Plutus award winner, her work has been featured on Good Morning America, New York Magazine, Forbes, CNBC, and more. Tori answers common financial-related questions in her “Dear Tori” series for Empower.
I live with my boyfriend. I believe we are life partners. We split rent and groceries. But for now our finances (bank, etc.) are separate.
I’m interested to hear how couples deal with shared finances. I make a lot more than my partner right now, so for example, I paid a lot more for our dog’s recent vet emergency than he did. I honestly have no resentment about it, but this is the first time I’m living with a partner (I’m 30) and I’d love to learn about all the things we should be figuring out and talking about and doing to make combining finances easier later if we go that way, especially when people make different incomes.
What should I do?
Managing money as a couple
Thanks for your question. You should know, right off the bat, that managing money as a couple can be one of the most challenging, yet rewarding, financial milestones — and is something I’m constantly asked about by my coaching clients, so you’re not alone.
Personal finance is personal. The way you manage money in your relationship is entirely up to you and your partner, but you should start by creating what I call a “money date.” It’s a half-hour commitment, once a month, that goes in your calendar. Make it something you look forward to — maybe a bottle of wine and takeout from your favorite restaurant — and check in on your money together. Talk to each other in terms of shared goals, like, “I know we want to travel to Japan in September. How do we use money as a tool to get there?” Conversations about money should be open, transparent, and frequent; and giving yourselves dedicated time to have them will be a game-changer.
Because you and your partner have a wage discrepancy, it might be worth looking into how you’re splitting expenses and discuss a solution that would work for both of you. Many couples split expenses 50/50, while others split according to the ratio of cost vs. income. For example, if you make $100,000 and your partner makes $75,000 — a total income of $175,000 — you’ll divide your income by the total to get 57%. That would be the percentage of expenses you’re in charge of paying, while your partner would pay 43%.
Many couples choose to share finances differently — some keep entirely separate bank accounts, while some choose to combine everything. I have found success with clients who do a hybrid: they keep their finances largely separate but have a shared account for shared expenses or shared goals. This makes paying regular bills easy, while also allowing you the freedom and control you might crave. Regardless of what method you chose, I cannot stress enough how important it is to have at least a bit of your own money. This is not sneaky or secretive, it’s safe.
And speaking of safe, if you do end up getting married, a prenup is always something to consider. While many consider prenups unromantic or like you’re “dooming a relationship to fail,” it can be a source of great comfort to both of you.
The fact that you’re considering financial next steps with your partner are amazing, and regardless of how you proceed, remember that communication is key. I encourage you to use money as a resource to build the life you want together.
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