Last week, I talked about how Jordan and I are sharing our finances right now. Today, I want to take some time to discuss some of the different ways couples can choose to share their finances (or not) and what I think are some of the implications of each. To me, I envision different ways of sharing finances as existing along a continuum, with separate finances at one end, combined finances at the other, and various blended models in between.
To me, this means that everything is separate – all your bank accounts, credit cards, savings, paycheques, etc. The couple would work out how their expenses will be shared between the two of them. Some examples of this would be splitting the bills 50/50, splitting the bills proportional to income, or splitting the responsibility for paying certain bills (i.e. I pay rent and you pay groceries). This is really common in roommate situations, but I’ve also seen it with couples as well. I think this can be a good place for couples to start when they are just starting out and aren’t sure if they are serious enough about each other to blend their finances.
I consider blended finances to be anything in between the combined finances and separate finances end of the spectrum, so there are infinite variations of what constitutes blended finances. This can change pretty frequently depending on the couple and the situation they find themselves in. A common model that I have seen is to have a shared account that you pay your shared bills out of but have separate finances otherwise. Again, in that situation the couple would have to work out who contributes how much to the shared account and how the bills will be split. A lot of the people that I have talked to prefer this because it allows for shared expenses while still leaving each person a fair degree of freedom with the money that they earn. There can also be blends where you have shared savings accounts, credit cards, or mortgages. Again, it’s a pretty broad category so if you are thinking about blending your finances, it’s important to talk with your partner about your comfort levels and the degree to which you want to share your finances. This may also work if you and/or your partner have assets that you are bringing into the relationship but want to keep separate (i.e. for legal reasons, one of you runs a business, etc.).
I see the combined finances end of this continuum as being well, exactly that, combined. What’s mine is yours and what’s yours is mine. Which, if you’re getting married or in a common-law relation, is how you are legally viewed anyways. (I think. I’m not an actual legal or financial expert, so if you need to know this information please ask an actual expert. Someone who knows for sure and is not just guesstimating.) What does this look like? Well, things like a joint household budget, joint accounts, joint savings together, etc. Couples that I see having combined finances usually still have some wiggle room (i.e. they each get so much money every month to do whatever they want with without judgement from the other) but at the end of the day that’s a decision they made together. Ideally, in a combined financial situation, all financial decisions would be made together.
Truthfully, this is where Jordan and I would like to end up. We believe that our relationship and upcoming marriage is all about us working as a team to have a great life together. To quote the wise wise ladies at APW:
marriage is about pulling together. It’s about building a life together, through thick and thin.
For us, thick and thin includes finances. We recognize that at times over the course of our lives we each might contribute more or less to our shared finances, depending on other life circumstances. We’re committing to each other, to stick by each other through everything in life, and to share everything in life. Why wouldn’t our finances be any different?
If you want to do some further reading on this topic, I did a bit of research for you and found a few other articles that I think are worth checking out. Forbes talks several different models for sharing finances with your partner, as does Money After Graduation. Lifehacker has an article talking about how to merge finances after marriage, but I think the points in it are equally applicable to non-married couples who are thinking about this question. Finally, Young and Thrifty talks about the pros and cons of joint vs. separate accounts.
And now, as always, I turn it over to you. Any thoughts you want to add? Anything I’ve missed in my discussion on shared finances?