Should You Merge Your Finances With Your Partner?

You’ve finally found the one, and now you have to figure out what to do about your money. If happy couples on Instagram are any indication, you just mash every part of your life together and live happily ever after. And that mashing includes your money. 

It’s what you’re supposed to do, right? You’re in love. Who needs personal and financial boundaries? But maybe you’ve been burned by a partner in the past, or your own financial history has a couple of dim spots you’re still trying to remedy. In this delightfully modern age, expressing your love for one another doesn’t mean you have to combine your finances completely — or at all.

Here’s what to consider before you open any joint accounts.

Trust your gut and go slow

If you have any reservations about sharing financial responsibilities with the person you’re planning to be with, you should hold off on opening joint accounts.

“You need to be in a relationship where you trust the person you’re with, because [with a] joint account, either person could completely liquidate the account,” Kari H. Lichtenstein, partner at family law practice Stutman, Stutman & Lichtenstein, said. “Both parties have the right to spend whatever money out of it.” If you haven’t yet had a few conversations about your financial situations, you may want to hold off.

Because if that person runs off with your money and you break up (which I’m assuming would be mutually occurring events), it would be a big legal hassle to try to get that money back.

If you’re just moving in together or preparing to get married (namely, if things look hunky dory for your future), you don’t need to merge your finances completely all at once. In fact, while researchers at UCLA have found that long-term committed couples who share their bank accounts are happier, they also found that couples who do so in their first year of dating don’t have the same happy outcome.

Instead of diving in headfirst, you could open a joint account and only use it for select shared bills, like rent or utilities. True love does not require putting your paycheck into your shared account via direct deposit.

There’s no “right” way to merge your finances

A 50/50 split isn’t required to have a healthy long-term relationship.

The most important part of managing finances for both partners is being transparent around expectations and financial responsibilities, and finding a fit that works for both of you. If you have two similar incomes, you might decide to contribute evenly to your joint account. If there’s an income imbalance or only one of you works, a percentage of your earnings might be more appropriate to contribute.

“I’ve seen couples budget by opening up a bunch of different accounts and labelling them for what they are,” Lichtenstein said. One memorable client had an account for each child, a holiday fund, and the veterinarian. “They always had money available if something happened to their dog. They were kind of self-insured that way.”

For some ideas for how two-income couples can manage their cashflow, check out this post.

Just because it’s separate doesn’t mean its yours

In some states, Lichtenstein warned, it doesn’t matter who owns which bank account. If you earned it while married, that money belongs to the marriage and can be split in the event of a divorce. “Unless they have a prenup, that’s just not their own money,” she said.

The only way to guarantee that your money or other assets remain completely autonomous from your spouse’s is to get a prenuptial agreement. A prenup doesn’t have to be prepared only for the case of a divorce. It can also outline how partners will manage their money as spouses. And it’s not just for people entering a marriage with wealth. A prenup can help you line up your financial expectations of one another during good times, which can make an unfortunate bad time a lot easier to deal with.

As for the cost of a prenup, it depends where you live and how complex your finances are. The cost of working with a human professional (as opposed to an online fill-in-the-blank service) will probably start at $2,000.

If you’re not getting married but still want to draw some legal boundaries, you could consider a cohabitation agreement.

There’s no shame in keeping some things separate

You’re not an imperfect couple if you don’t merge all your financial accounts. Lichtenstein said it’s wise to have access to money that’s separate from your partner, even if you’re excited to open joint accounts.

“You just never know what may come up,” she said, whether it be an emergency or just a moment when you want to spend without having to be accountable to your partner for every penny. “I think it gives you your own sense of having some control over what you can and can’t do, within the marriage or relationship.”