There are many reasons to combine finances in a relationship. However, depending on your situation, sharing everything could make life harder for both of you.
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As personal finance site Money Ning explains, there are some situations where sharing your finances doesn’t just have consequences if you break up. It can hurt you even when you’re together. For example, your credit scores are calculated independently. Taking on your partner’s debt can negatively impact your debt-to-income ratio or your credit utilisation score, if there are substantial differences between you and your partner’s debt:
Van Cleve warns against cosigning on debt with your spouse. He points out that, in most states, your credit is separate from your partner’s. Cosigning “impacts your debt-to-income ratio for future loans, and if payments aren’t made by the borrower, your credit score will suffer, too.” Not only that, warns Van Cleve, but things can change over time and you don’t want to be on the hook for your partner’s debt after the relationship is over.
Fortunately, combining your finances isn’t an all-or-nothing endeavour. When you’re considering how to handle money in a relationship, look at each choice individually. Of course, it’s also important to keep in mind what could happen if you break up, and not rush into any decisions. But even if you’ve decided that combining is a good idea, look at how each choice will impact both of you.
Love and Money: Should You Really Share Everything? [Money Ning]