These money management approaches can help alleviate financial stresses for couples

Canada Life - Feb 15, 2023
Should couples combine finances?
A couple looking at their accounts online

As your relationship progresses with your significant other, you should have a discussion about money to ensure you’re both on the same financial page. You might be wondering whether couples should combine finances, keep accounts separate or create joint accounts and how expenses should be split in a relationship. The first step in making those decisions is to discuss finances with your partner.

Here’s why couples need to discuss finances

If you plan to share your lives, you’ll need to discuss finances in a transparent and honest way. Relationships are about compromise and honesty, whether that’s relocating a sports jersey from the living room wall or trying to curb a spending habit. According to one Canadian poll, 17% of Canadian couples argue about finances at least once per week.

The same Canadian study also revealed reasons why couples want to keep their finances separate. These include:

  • wanting to maintain independence
  • protecting themselves in case of relationship breakdown
  • desiring to keep their purchases private from their partner 
  • feeling that their way of managing finances is easier than their partner’s preferred method

The good news? Couples who communicate honestly and frequently about finances —referred to as “financial intimacy”—are brought closer together by these discussions.

What couples should consider before choosing how to manage finances

1. Do we have similar financial situations?

If one partner has pre-existing student debt or ongoing medical expenses not covered by insurance, how will you handle that as a couple?

2. Do we have similar spending habits?

If one partner is more frugal and the other more spontaneous, where might each partner be willing to compromise?

3. Do we have shared financial goals?

Whether it’s budgeting, saving or investing, it’s simpler when both partners have the same approach. Are you each able to save the same monthly percentage of your income—or the same dollar amount—toward a vacation or a down payment on a home? Which of those will be your shared priority?

4. Do we have similar incomes?

It’s unlikely you’ll both have the exact same income. For example, the gender pay gap already puts women at a disadvantage. You’ll also want to think about how you’ll approach disparity in incomes now and in the decades ahead, such as if one partner decides to change careers, return to school or contribute to the household by staying home with children.

5. How will we plan to manage money day-to-day?

If you do decide to join your accounts, which partner will pay bills or oversee automatic transfers? How often will you set aside time to discuss your financial situation? If one partner feels uncomfortable discussing finances, what can the other do to ease that? Some couples do backyard picnics or ice cream dates when discussing finances. These fun events can create a positive and relaxed setting for honest communication about money.

6. How to deal with money in a relationship

Based on your discussions with your partner, your shared values, your income and your finances, you might decide one of the following approaches works for your relationship.

7. Combine all finances

This means a joint account where all income is deposited and from which all bills are paid. Joint credit cards and filing taxes as a couple are part of combining finances. This method is simple and low maintenance but may not be right for all couples. If your relationship is ready for this arrangement, there are financial benefits, such as spousal registered retirement savings plans (RRSPs), income splitting and tax deductions. It’s best to review your options with me.

8. Keep all finances separate

With this approach, each partner keeps their own, sole accounts. Couples will need to decide who pays which bills or how bills will be split. This could be a 50/50 split or a percentage split based on income or usage.

9. Have separate and joint accounts

This approach is a mix of the above. Each partner contributes a certain monthly amount (or percentage of income) to a joint account. Shared bills are paid from the joint account, while personal expenses are paid from each partner’s separate account.

10. The best way to manage money as a couple

The best way is the way that you decide is right for your relationship. Recognize that financial discussions can be emotional for some people. It’s best to approach the discussions with honesty and transparency. The more you and your partner decide to be open about money and talk about finances, the easier these discussions become.

I’d be more than happy to help you with these discussions. Contact me today to set up an appointment.