Combining finances as a couple can be challenging, but it’s certainly possible. Couples often struggle to manage their finances at first, but with time, communication, and compromise, they can find the perfect solution.
Before you decide how to combine finances with your partner, be sure to pay off any debt with the debt snowball method. Then, choose one of these three methods to balance your finances with your partner’s:
1.Combine your finances with your partner’s.
This method involves each partner taking their existing assets and liabilities and combining them together in a joint account. You and your partner would each pay off your personal debt, then apply for a joint credit card together. You would also distribute spending money between you and your partner.
The biggest benefit of combining finances with a partner is that both you and your partner both oversee spending. This way, there’s less of a risk of overspending. The drawback is that there’s very little flexibility, and neither you nor your partner can be financially independent, which can strain your relationship.
2. Each partner contributes equally.
In this system, each partner has individual accounts and debts, but they open a joint account for paying household bills. You and your partner would create a budget and list all of your joint expenses, then divide that budget in half and pay equal amounts.
In the equal contribution method, income isn’t relevant, which is fine if you and your partner make around the same salary. If either one of you makes significantly more than the other, though, whoever makes less might feel financial stress.
3. Each partner contributes proportionally.
In some cases, one partner makes significantly more than the other, which could make equal financial contribution difficult. If you don’t want you or your partner to be financially dominant, you may want to try the proportional contribution method.
The proportional contribution method bases financial contribution on income. If you make $100,000 a year and your partner only makes $50,000, you’d contribute twice as much as your partner. This method is great for couples that don’t work the same amount of hours per week.
Combining finances can cause stress, but it can also alleviate it. When you compromise with your partner and figure out a financial system that works best for both of you, you’re sure to have a happy life.
Originally written by Kevin Flynn – Kevin is a former fintech coach and financial services professional.
