Whether you’re tying the knot or just moving in together, the decision about whether to combine finances is a big one with potentially major ramifications.
Here are your options:
1) Combine everything. In the olden days, this approach was the given. Then again, in the olden days, two income-generating people in a relationship wasn’t the norm. Things have become more complicated. Combining bank accounts is the most convenient and open option. However, it tends to only work for couples that have similar spending habits to begin with. It’s obviously important to have a very candid conversation up front—and to know each other well—before going this route.
The down side of combining assets? Well, there’s no such thing as privacy in this sort of arrangement. Every penny you spend it subject to your significant other’s scrutiny. Hard to buy surprise gifts this way, to say the least.
2) Combine some things. This is a modern solution for a lot of couples. The easiest way to do this is to keep your individual accounts, but also create a joint account and come to an agreement about how much goes into it, and how that money is spent. This can be a great way to divvy up bills evenly… and still retain autonomy over your spending money.
Of course, the assumption here is that each partner can contribute fairly to the account, and still manage to run his or her own finances individually. If one partner makes significantly more than the other—or is not as financially savvy—this can be a lopsided arrangement.
3) Combine nothing. At the very least, this keeps things simple. You each control your own money, and all is fair. According to The American Bar Association’s Family Legal Guide, the best way to protect your assets in case of a divorce is to keep accounts in your own names and never co-mingle money. Understandably, most newly blissed-out couples deciding whether to combine their finances don’t want to think about divorce.
What about debt?
Well, in general, financial advice is usually to consolidate debt. So, if you’re getting married and looking forward to a life of financial stability together, your best bet is to consolidate any joint debt right off the bat, and work on paying it down as quickly as possible. (Note that you can’t combine debt until you’re actually married.)