How Couples Arrange their Finances
Deciding whether or not to merge your personal finances is a tricky subject for many couples. Below are three commonly used options that you can consider. Be sure to discuss the pros and cons of each before making your final decision.
- Having a joint account that you both use for everything
In this arrangement, couples pool their incomes and pay all expenses—both joint and individual—from their shared account. This makes tracking expenses as a couple very simple, and helps build openness and transparency in the relationship. On the other hand, this can be difficult for those who like their financial independence.
If you choose this method, consider whether there will be some exceptional expenses that you handle individually, such as paying off debt that you had before you entered the relationship.
- Keeping individual chequing accounts and having a joint account that you use only for common expenses
In this arrangement, couples use their personal chequing accounts for their individual expenses, but open a joint account that they use for shared expenses such as groceries, rent or mortgage payments, and utility bills.
Couples that choose this option are able to split shared expenses easily. Because individual purchases are separate, though, budgeting as a couple can be more difficult.
If you choose this method, it is important ask yourselves these questions:
- How do you decide which expenses are paid for jointly?
- How much will each of you contribute to joint expenses? Will you split them 50/50 or contribute a percentage based on your incomes?
- Having completely separate accounts
In this arrangement, couples maintain their separate finances, and split joint expenses as they arrive. This may work well for couples who value their financial independence, but can be difficult in other ways.
Sorting out how to divide each expense as it occurs takes some effort from each partner and can cause confusion. Also, budgeting as a couple can be more difficult if you each maintain completely separate accounts.
How you and your partner decide to arrange your finances may also affect your individual credit reports. If you have a credit card together, for example, only the primary card holder will develop a credit history by paying it off on time. If there is a problem with payment though, both partners may be held liable for the debt and thus both partners’ credit scores could be hurt.
If you are thinking about sharing common expenses using a joint line of credit or a joint credit card, don’t forget to consider your responsibilities as a joint borrower before making your decision. If you co-sign a loan, you become equally responsible for repaying the loan.