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5 Things to Consider Before Combining Finances with Your Partner

Adding money to any relationship is a big step. It’s an even bigger step if you decide that it is time to combine your bank accounts. You and your partner might consider the convenience of merging your finances, but it is important to take a step back and thoroughly examine whether or not it is the right move to make. Remember, too, that even though it might not be the right move at this time, combining financial accounts might be a more practical move later on. Here are 5 things to consider before opening joint bank or credit union accounts with your partner:

1. Do You Have a Legal Arrangement?

One of the first things to consider is the legal status of your relationship. Opening a joint account with someone else is a big step – and an expression of trust. If your partner decides to drain the account, and you haven’t defined your status legally, you don’t have a lot of recourse in some cases. A legal binding, whether it is a marriage, civil union or some other arrangement, can help protect both parties.

Check the state law in your locality to see how common property is handled, and to find out about how joint accounts are handled. You can also check into the specific policies of the financial institution in question. Make sure you understand the implications of your decision to let someone else have unrestricted access to your money.

2. Are You Comfortable with Your Partner’s Financial Situation?

Another consideration is the comfort level you have with your partner’s financial situation. Is he or she financial stable? If there are debts, are confident that they can be handled together? This can be a tricky issue to resolve. However, if you are not comfortable with your partner’s finances – and you don’t want to risk his or her problems becoming yours – it might be a good idea to keep things separate for awhile. If you don’t want your newly-minted joint account raided to pay off ill-advised credit purchases, it’s a good idea to think twice.

Be honest with each other before you open a joint account. You can plan a way for one partner to reach a certain level of financial stability, and then revisit the idea of combining finances.

3. Do You and Your Partner Share Similar Financial Habits and Goals?

It’s a scary thing to allow another person access to your money. This means that it is vital that you trust your partner and his or her financial habits. Discuss your finances in depth before combining accounts. Additionally, it is a good idea to talk about your financial goals. Developing shared financial goals is vital if you want to have a successful money relationship as part of your life relationship.

Some partners are so widely different when it comes to financial priorities, and spending habits, that sharing accounts is a poor idea. If one of you is a saver and one a spendthrift, it can cause problems. Additionally, resentment can arise when one (or possibly neither) of you gets what is wanted. Talk about these issues ahead of time.

In some cases, it might be wise to simply open one joint account for household bills and shared financial goals that you agree upon. Each of you puts a certain amount of money in the shared account each month, and keeps everything else separate. This is one way to make sure that shared expenses are covered while still protecting your own finances from habits you might not approve of in your partner. Of course, you have to trust that your partner will do his or her part in the joint account, and not withdraw shared money to shore up his or her own finances.

4. What Sort of Roles Do You Each Expect to Play in Finances and the Household?

You also have to consider the roles you each expect to play in the household. In some families, there is one primary breadwinner, and the other partner stays home to care for children and home. In such cases, it might make sense to have completely combined finances. The stay at home partner will need access to funds to do grocery shopping, and even to spend money on his or herself on occasion.

Staying at home is a big job that isn’t financially recognized in our society. It is vital that you include a stay at home partner in money decisions. Discuss the roles you expect to play ahead of time, and work out a way to ensure that both partners are satisfied with the situation. If you want your partner to stay home while you go out and earn money, you have to make sure that he or she is a full partner. Otherwise, there will be discontent with staying home.

You might also need to make adjustments to your financial setup if the stay at home partner finds a way to make money while staying at home.

5. What Sort of Account Do You Plan to Open?

Finally, before opening a joint account and combing finances in any way, it is important to consider what type of account you will open. There are different types of bank and credit union accounts, and there are ramifications for each of these. In some cases, it isn’t always a given that your partner will “inherit” your account if you die. Make sure you understand the terms of conditions of any account you plan to open, and ensure that you are prepared for what could come next.

Combining finances is a big deal. You want to make sure that you are ready for it. In today’s world, where so many people have functioned as individuals for so long, it can be hard to begin sharing financial decisions. Make sure you are ready to combine finances, and honestly evaluate whether or not joint accounts are really a good idea in your present circumstance.

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  |     |   Comment #1
I've been married for almost 18 years and have never once had an argument with my husband regarding money.  Not too many couples can honestly say that. 

We each have our own bank accounts and share one joint account, to which we each deposit money monthly in order to cover household expenses.  We each maintain our own separate accounts and can spend money freely.  So, if he wants a new fishing pole or I want a new pair of boots, no one has to ask or feel guilty about purchases. 

Although some may feel that this is a lack of financial togetherness, it works wonderfully.  How many couples do you know that don't argue about money??

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