How to combine finances for couples

How to combine finances for couples

Talking about finances can be awkward in any relationship, and can often involve a lot more than deciding who’s covering the restaurant bill. In fact, arguments around money are among the most common reasons why relationships break down1.

One area that might create tension between couples is when and how to combine finances, if at all. Our recent Family Finances report2 highlighted that couples in the UK approach managing money differently depending on their circumstances; for example, the majority of cohabiting couples (58%) share their money equally, however this number jumps to 72% amongst couples who are married or in a civil partnership.

How to approach combining finances

Combining finances with your other half can be a difficult task but, if approached in the right way, the process doesn’t need to be stressful or overwhelming. There isn’t a ‘one size fits all’ answer to merging finances, but there are ways you can make it a far more stress-free and manageable experience.

Communicate and be open

Bringing your financial health out into the open – whether this is savings, debts, income, or expenses – is a great place to start. Although being open and honest about your finances is sometimes easier said than done, it can play a crucial role in building and maintaining a healthy relationship. Not only will this result in both you and your partner being aware of the bigger picture, it may even prevent arguments further down the line – for example, one that could arise should your mortgage application be rejected due to a poor credit score that was swept under the carpet.

Establish a budget

Creating a realistic budget will help you manage your finances more effectively. The budget you set out should include everything from fixed expenses, such as rent and bills, to joint expenditure, such as holidays and nights out. We all want to maintain a little freedom, however, so it’s important to also allocate individual spending allowances or money that you can spend without having to inform your partner. Our report indicated that nearly half of couples (49%) have an individual account that their partner knows about, highlighting how important it is for many to maintain some financial freedom.

Set out your financial goals

What do you want to achieve in the future? Whether it be retiring at the age of 60 or paying off your mortgage within 10 years, setting financial goals together could not only make these easier to achieve, but could also help you talk about money more openly and honestly.

Ways of combining finances

When it comes to combining finances, there is no right or wrong way – how you choose to do it should be based on what works best for your and your partner’s financial situation. You may already have a method of managing money that works for you, but if you feel another system could be a better fit, below are four options for you to consider.

What mine is yours

As the title suggests, this approach involves combining all accounts, and both you and your partner have an equal say in how you manage your finances. While this option displays trust, it also requires you to be completely honest about how you feel money should be spent and saved.

Could it work for us?

If you’re married and don’t have any significant differences in income and debt, this could be a feasible way of combining finances.

Meet me halfway

This method involves you and your partner keeping your finances separate, except for one joint account. You both contribute an equal amount to this, and pay your communal expenses from it.

Our report highlighted that just over a third (35%) of couples in the UK have a joint account they both have access to.

Could it work for us?

This may be worth considering if you aren’t yet married, earn more or less the same income and have similar levels of debt.

Dependent on income

This approach is very similar to the one above, except that, rather than contributing an equal amount, you pay in a proportion of your salary to the joint account instead. For example, you agree to each contribute 40% of your take home pay to cover joint expenses.

Could it work for us?

If you earn significantly more than your partner, or vice-versa, this may be a viable option. If the person who earns more wants to lead a more luxurious lifestyle that the other can’t quite afford, this setup will be particularly beneficial.

Each to their own

If you want to maintain complete independence over your finances, this is probably the option for you. When deciding to keep finances separate, it may be worth discussing who will be covering certain expenses – for example, you may be in charge of paying rent, while your partner covers food shopping, bills, and vehicle maintenance costs.

In the UK, this is the preferred option for nearly a third (31%) of cohabiting couples, while the number falls to one in five (17%) amongst married couples.

In any relationship, being on the same page about finances is vital. It’s important, however, to remember to take your time and only do what you feel comfortable with when it comes to combining finances. You may also want to consider life insurance so that your partner can keep on top of everything should the worst happen.

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Additional Sources

[2]In total, 32,915 UK consumers have been interviewed for the tracker between December 2010 and May 2016. This data was combined with additional information from external sources cited within the main report listed below and used to form the basis of the Aviva Family Finances Report. All statistics refer to figures from the latest wave of research unless stated otherwise.

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