Why some couples join their finances while others keep them separate

Ah, love and money, two things that can make the world go round - or make your head spin. If you're in a relationship, you've probably danced around the topic of finances more than once.

Whether you're just starting out or have been together for ages, figuring out how to handle money as a couple can be a bit of a puzzle. We're here to shed some light on the ins and outs of merging finances, keeping them separate, or finding that sweet spot in between.

Why do couples decide to open joint accounts?

What’s the deal with joint bank accounts? Well, marriage tends to prompt partners to plan their future together. When wedding bells are ringing and love is in the air, sharing everything can feel like the natural next step. In fact, 85% of modern couples end up opening a joint account around marriage, though most couples nowadays don’t use them exclusively. 

Pooling financial resources can make things simpler, especially when couples have big expenses like rent or a mortgage to tackle. Creating a joint account is a bit like being in a boat together - you're in it together, for better or worse. And combining incomes can provide a sense of security and stability.

Reasons couples prefer separate finances

Although there are benefits of joint accounts, most dual income couples are taking their time to  merge their money. Some are even choosing to keep their finances completely separate, like two ships passing in the night. There’s no right or wrong answer.

Couples are getting married later in life nowadays.  The US Census Bureau found that the average age at first marriage is around 28 for women and 30 for men, that’s most of your twenties as a financially independent adult. So it’s not a surprise that some people today find it daunting to merge finances and change what feels normal.

Partners entering a second or third marriage who had bad experiences with joint accounts in the past may also prefer separate accounts. Operating finances independently can also offer a sense of autonomy and freedom. As an independent adult before marriage, depending on another adult for money can feel strange to some.

Each partner can maintain their own financial identity and spend their hard-earned money however they best see fit. Even for couples who primarily use joint accounts, having private spending/investment accounts is increasingly common.

Why many couples like a hybrid approach to their finances

Now, if you're thinking, "Why can't we have the best of both worlds?" - you're onto something. Roughly 40% of couples take a hybrid approach to their finances where some accounts are joint while others remain separate. According to Bankrate, millennial couples in particular strongly prefer the hybrid route at roughly 69%. 

The perks of a blended approach is couples can enjoy the benefits of shared finances for common day-to-day expenses and large purchase goals while each partner still has their own cash stash for personal splurges or rainy day funds. It's a strategy that supports a happy balance that works well for both partners.

But who pays for what?

So, how do couples actually decide who pays for what? A UBS study found that 85% of women manage the day-to-day expenses in their partnerships and 58% of men take the lead on long-term investment and financial planning decisions vs 23% of women and 19% sharing those decisions equally.

But like a lot of things in personal finance, there's no one-size-fits-all answer to how couples should split expenses. Communication is key, however, so sit down together and have an open and honest conversation about your financial goals, priorities, and spending habits.

Perhaps you’ll choose to divide up expenses based on each partner's income, splitting bills proportionally to ensure fairness. Or maybe you’ll just decide based on each other’s strengths. 

Different ways couples split expenses

Here are a few examples of different methods couples can use to split their expenses.

Split down the middle: Some couples prioritize equality and go for the 50/50 split on everything. They either divvy up expenses as they come in or tally up receipts and settle the total bill at the end of each month. Some take turns picking up the dinner tab every other time which counts as splitting costs evenly too.

Income percentage: Couples who have very different income levels may find splitting based on a percentage of each partner’s income to be more suitable. This can also apply when two partners have a big age gap or are at different stages of their careers. Each person contributes a fair share based on what they earn. It's like a financial high-five for teamwork.

One central pot: If you're all about a teamwork vibe, consider setting up a joint expense account. Each person tosses in a set percentage of their income - or possibly all of it, and voila. All your bills get paid from one central pot. Just remember, communication is important to keep the account topped up and used in a way you both agree.

Divide and conquer: Some couples divide expenses based on what each partner can afford or wants to take on. For example, one partner can be responsible for the electric, gas, and water bills while the other pays for waste collection, phone, internet, and streaming services. This often creates the most tension since every purchase is another potential conversation.

Whatever approach you take, friction can arise if you’re not on the same page. So, sit down, have a chat, know that it’ll be uncomfortable at times (and discomfort is normal), and lay out your game plan together. And remember, you can always try something else if things don’t work the way you expect. With a little teamwork and a lot of love, you'll be navigating the financial waters like pros in no time.

Go forward with wealth building together

If you and your partner are actively navigating how to merge finances, Plenty was built with your financial situation in mind. Plenty goes beyond budgeting, making it simple to invest, save and grow towards your future goals by unlocking access to the financial strategies of the wealthy. Ready to get started? Sign up for your free trial today.