Not looking forward to the “money talk” with your partner? There are no set rules, but here are some tips to make the transition easier.

couple embracing on the couch

The percentage of adults cohabitating with their partners is on the rise.

Maintaining a healthy relationship with your partner can be tough. Throw money into the mix and it can make or break your financial life.

There is no set formula for how you should combine finances with your partner. However, we have some do’s and don’ts from relationship and financial experts on how to navigate shared finances in a relationship. Plus, we offer some scenarios for merging finances that have worked for couples just like you.

In this article:

The “do’s” of combining finances

Being open and transparent plays a huge role in any difficult conversation. Especially this one. Be honest with your partner about your concerns. Write them down and encourage your significant other to do the same. Then, have an open discussion about each of your concerns and consider potential solutions.

Don’t be afraid to ask the hard questions. How much do they make? What if you break up? Does he or she have money management techniques that are questionable? Addressing your concerns is not a way to bash your partner. Try to find solutions to make it work for both of you.

Are separate bank accounts or combined accounts better for you? This answer varies from couple to couple and will depend on where you are in your relationship and financial lives. The short answer — you have to do what’s best for you.

For some couples, that means preserving separate finances, but also maintaining a shared account that each can contribute to. Joint accounts like these should be used for shared expenses such as rent, mortgage, utilities, and groceries.

If you do decide to combine finances, both you and your partner will have access to the funds, such as a joint checking account. Meaning both of you can legally take out the money and spend it on anything you want. You both are also responsible for any debt that incurs on the account and there’s potential to affect each other’s credit score.

Stress around debt can cause serious problems in a relationship, so you want to try and eliminate it where possible.

Start by having an open and honest conversation about your debt and come up with a financial plan. Ask questions like how much debt do you have? What are the monthly payments? How high are interest rates? You may not be able to pay off all of your debt at once, such as student loans, but you can start by eliminating smaller debts like credit cards.

What if it’s your partner who is carrying the majority of the debt? Again, this answer will be subjective to you as a couple. You may want to do everything you can to help your partner financially. However, it’s essential to be realistic about the support you can offer. Communication is critical. Brainstorm ideas on how you can help the other person get back on track and provide emotional support where you can.

How much is “too much” when it comes to your spending habits? Establish a budget to guide you and your partner. This will give you an idea of what merging your finances will look like. Gabriel Kaplan, a CFP® and CPA in New York City, told Money Management International that he and his wife “agreed on a savings rate, deducted from our living expenses and then allocated what was left over to ourselves … Things have worked out because we stick to our budget and we both trust the other person who is responsible.”

Create a budget for the first two to three months. Include groceries, rent, household expenses, and date nights. Figure out how much you might typically spend in a given month or week. This will give you a realistic snapshot of where the majority of your money is going and how much you should save. Set a budget and use it for the first couple of months then adjust as you go. Don’t feel restricted by your budget, instead use it as a guideline for spending.

A budgeting app can help you save money and track your spending as a couple.

Building an emergency fund should be one of your first financial goals together. Throughout your relationship, you will most likely encounter unexpected expenses. One of you may lose a job, major home repairs may arise or health problems can surface. An emergency fund is there to help soften that blow.

It’s a safety net of cash that will be used for emergency expenses so you don’t have to incur any debt. A good rule of thumb is to save around 6 to 9 months’ worth of living expenses.

Make sure to put this money in a separate account so you won’t feel tempted to make a withdrawal. Consider a high-yield savings account so that your money can earn interest over time. Try to replenish your money as you spend it and only use it for emergencies.

Even if you’re in your early 20’s, people who are in serious relationships should be thinking of retirement. If you’re truly in your relationship for the long-haul, then that means retiring together and combining your finances lets you work toward a plan that will support you both in the future.

You can start saving for retirement through a tax-advantaged retirement account provided by your employers like a 401(k), 403(b) or thrift savings plan. If you’re self-employed, consider a SEP-IRA that allows you to open an account through a brokerage or robo-advisor.

Roth IRAs are another great option. According to Shannon Compton Game, CFP® and host of Millennial Money podcast, “Roth IRAs offer a lot of flexibility and benefits that other retirement savings accounts don’t, such as the ability to withdraw your own contributions without tax or penalties. If you are within the income limitations, you can contribute to your 401(k) through work, and set up a separate Roth IRA on the side to maximize your contributions.”

When you share finances with your partner, you can work together to streamline long-term savings goals. If you’ve discussed buying a home or planning your dream vacation, you can reach these goals faster if you work together.

Consider seeing a financial planner first. Having a third-party present to ask the tough questions can make figuring out how much you need to save each month easier.

Many banks offer the same rate for savings accounts regardless of how low your balance is. So, create another savings account for this money. Using more than one savings account helps you not spend that money on something it wasn’t meant for. It can also give you easy insight into how well you’re progressing toward your financial goals.

When building your life with someone else, you may need more protection than you think. That’s where life insurance comes in. The thought of your partner passing away is a difficult scenario to consider, but when combining finances, it’s a conversation that needs to happen. How would you be impacted financially should your partner pass away?

If you have bought a home together, if you have children together, or if you have shared debts, you may need life insurance.  Life insurance can help you and your partner avoid any financial hardship should something happen to either of you in the future.

Term life insurance is an affordable option. This type of life insurance lasts for a fixed period of time (typically 10, 15, 20, 25 or 30 years) and provides a financial payout to your beneficiaries. That means your beneficiaries would typically be paid a lump sum of tax-free money if you were to pass away.

30-year term life insurance rates    
Age Coverage $1,000,000
30 Male $53.32
Female $43.31
35 Male $63.24
Female $51.65
20-year term life insurance rates
Age Coverage $1,000,000
30 Male $30.82
Female $24.55
35 Male $34.08
Female $29.03
10-year term life insurance rates
Age Coverage $1,000,000
30 Male $21.24
Female $15.70
35 Male $25.17
Female $18.32

Estimates based on pricing for eligible Haven Term applicants in excellent health. Pricing differences will vary based on ages, health status, coverage amount and term length. These prices do not reflect the rates for applicants in DE, FL, ND, NY and SD.


The “don’ts” of  combining finances

Even if your end goal is to combine all of your accounts, ease into it first and combine your accounts in stages. Make a list of all the accounts you want to combine and why. To start, leave some of your accounts separate.

Then, try starting a joint account for shared expenses, such as rent, groceries and utilities. Make a list that outlines assets (investments, bank accounts) and debts (student loans, credit cards) and who they belong to and what you’ll split. This may feel like a lot of work, but it will save you a lot of headaches in the long run.

Once you combine your finances, you may begin to feel comfortable and lose track of you and your partner’s spending habits. This is a slippery slope. If you have been single for a while or if this is your first time splitting finances, you may be used to doing everything on your own terms when it comes to your money. Carissa Coulston, a clinical psychologist, says that “sharing is an important part of any relationship, but spending joint money on personal expenses could end up looking like you’re taking advantage of your partner.”

You can no longer drop $200 on that pair of designer shoes just because you feel like it. You’re a team now and you have to work together to decide what is best for both of you financially. If you feel that one of you is beginning to lose sight of this, set aside time to discuss your finances once a month. Make it an opportunity for you both to get out of the house and chat. Try doing this on a weekend morning when stress is low.

Joining finances should not be an excuse to keep tabs on your partner. Peering over their shoulder and criticizing their spending habits will only push them away. Again, you’re a team. And part of building a strong team is trust. You trust that when your partner says they’re going to take the credit card to get groceries, that is really what they’re using it for.

However, if you find that this is not the case, you should address irresponsible or impulsive spending habits immediately. Just like you need to make sure you’re doing your part, they should be doing their part as well.

You shouldn’t keep secrets in your relationship regardless, and secrets around finances are a recipe for disaster. You may feel tempted to hide things from your partner if you have spending habits you aren’t proud of. Similarly, you may hide the amount of debt you have because you’re embarrassed. Don’t do this.

“Financial secrets take an added toll due to the effect they have on a sense of both physical and emotional security,” according to Carla Manly, a clinical psychologist. For example, if your partner ends up spending all of your emergency fund without you knowing and an accident happens, this affects both your emotional safety (betrayal of trust) and literal safety (financial security).

Different ways to approach combining finances

Every couple’s relationship is different. What works for one relationship may not work for you. So, it’s critical to do what feels right for you and your partner. Below are five approaches to finances that have worked for couples like you.

1.The “Equal” approach

  • What it is: Keeps most finances separate except for one joint account that you both contribute to equally.
  • Who it works for: Great for couples who consider themselves to have equal income and finances.
  • Who they are: Steven and Angela are in their late 20’s and have been living together for about a year. They both work hard and are successful in their careers. Neither has significant student loan debt or loans to pay off and they make around the same salary. Together, they decide to set up a joint checking account for shared expenses such as groceries, rent, and date nights. They both agree on an amount to contribute to the account each month.

2. The “Equal Percentage of Earnings” approach

  • What it is: Similar to the approach above, except instead of contributing the same amount to a joint account, you will be contributing the same percentage of each of your paychecks.
  • Who it works for: Say your partner makes a substantially larger income than you or vice versa. This approach helps even the playing field.
  • Who they are: Alice started a health company five years ago and it just recently started taking off. She is now making significantly more than her boyfriend, John, who is a freelance graphic designer. They have talked of marriage and buying a home together. Alice wants to move to a wealthier neighborhood. John is afraid he won’t be able to support the mortgage with his current income. Together, they decide to open a joint account where they each contribute a certain percentage of their earnings.

3. The “I Got You Next Time” approach

  • What it is: In this approach, you will take turns picking up bills and/or expenses for the other.
  • Who it works for: Perfect for couples who were on the fence about combining finances.
  • Who they are: Sierra and Mitch just moved in together. Mitch has a significant amount of student loans to pay off while Sierra has no debt at all. Mitch makes around $5,000 less than Sierra, but he loves to grocery shop and plan out their meals for the week. To make their finances easier, Sierra and Mitch decide to split their bills. Sierra pays for cable since she loves to watch football and Mitch decides to pick up the grocery bill because he loves to cook. Sierra, in return, buys a nice dinner out once a week.

4. The “It’s On Me” approach

  • What it is: When one person pays for all expenses in the relationship.
  • Who it works for: A couple where one partner earns a larger salary than the other or is the sole income earner.
  • Who they are: Mia and Alex have been living together for some time now. Alex just got accepted to grad school where she plans to get her Ph.D. However, during that time she will have to quit her current job. Mia makes a solid amount of money and has agreed to help pay the bills and the majority of expenses while Alex goes back to school. They have talked about the possibility of marriage and having a more  equitable approach to finances once Alex has gotten her degree.

5. The “What’s Mine Is Yours” approach

  • What it is: This is when you and your partner combine finances entirely and equally.
  • Who it works for: Married couples or serious couples who see marriage in their future.
  • Who they are: Kendra and Riley are getting married in a few months. They have discussed saving for a house and eventually a family. Kendra has some student loans, but Riley has agreed to help her pay them off. They decide to open a joint account where each of them deposits their monthly income. They use this account to set aside savings and pay for bills. They’ve also agreed to start saving for a down payment on a home.

Managing money together can help bring you closer as a couple. However, it can also tear you apart if you don’t approach it correctly. It’s important to be open and honest about any concerns and discuss different approaches that will work for both your relationship and finances.

Whether you decide to go all in and open a joint account or take it slow and start by picking up each other’s bills, create a monthly budget or spreadsheet that lays out what is combined and what is not. Doing this successfully will always come down to communication, your willingness to compromise, and trust. Remember to do what’s best for you as a couple.

Haven Life Insurance Agency does not provide tax, legal, or investment advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or investment advice. You should consult your own tax, legal, and investment advisors before engaging in any transaction.

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About Tom Anderson

Tom Anderson is an award-winning financial journalist whose work has appeared in CNBC.comKiplinger’s Personal FinanceMoneyMonocle and Wired. He was a 2008-09 Knight-Bagehot Fellow in Economics and Business Journalism at Columbia University.

Read more by Tom Anderson

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Haven Life is a customer-centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our editorial policy

Haven Life is a customer centric life insurance agency that’s backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual). We believe navigating decisions about life insurance, your personal finances and overall wellness can be refreshingly simple.

Our content is created for educational purposes only. Haven Life does not endorse the companies, products, services or strategies discussed here, but we hope they can make your life a little less hard if they are a fit for your situation.

Haven Life is not authorized to give tax, legal or investment advice. This material is not intended to provide, and should not be relied on for tax, legal, or investment advice. Individuals are encouraged to seed advice from their own tax or legal counsel.

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Haven Term is a Term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a Simplified Issue Term Life Insurance Policy (ICC19PCM-SI 0819 in certain states, including NC) issued by the C.M. Life Insurance Company, Enfield, CT 06082. Policy and rider form numbers and features may vary by state and may not be available in all states. Our Agency license number in California is OK71922 and in Arkansas 100139527.

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