Jul 11, 2024

Financial planning, Relationships

How to Combine Finances at Different Stages of Your Relationship

Emily Luk

CPA, CFA - CEO and Cofounder of Plenty

Every couple and relationship is unique. After years of research, we've identified some general practices for couples at each relationship stage. In this post, we'll cover:

- Combining finances before marriage

- Combining finances after marriage

- Combining finances after buying a house

- Combining finances after having a child

- Combining finances for couples who don't plan to get married

Combining Finances Before Marriage

Before marriage, most couples start managing shared finances by splitting expenses. The three most common ways to do this are:

  1. 50/50 Split: Best for couples with similar incomes and savings.

  2. By Income: Ideal for couples with significantly different income levels.

  3. By Spending Category: Works for couples with different spending habits in specific categories like dining out, shopping, etc.

During this stage, couples often save for shared goals like trips or holiday gifts. Joint accounts can seem like a big step, so split goals (where each partner saves in their account) are a good starting point. It's also crucial to discuss your financial situation openly, covering both assets and debts.

Combining Finances After Marriage

In previous generations, couples typically merged all finances upon marriage. Today, 85% of couples open a joint account around the time they get married, but many don't fully combine their finances. Instead, marriage often marks the start of shared finances, with various approaches to managing joint accounts:

1. Joint Accounts for Big Expenses: Personal accounts cover other costs.

2. Paychecks into Joint Accounts: Allowance paid to personal accounts.

3. All Paychecks and Expenses through Joint Accounts: Full financial merging.

Joint accounts help simplify managing shared expenses. Couples also open joint savings or investment accounts for shared goals. However, it's important to understand state laws regarding asset ownership, which can vary significantly.

Combining Finances After Buying a House

Buying a house is usually the biggest purchase a couple makes together. This includes saving for a down payment, applying for a mortgage, and managing ongoing expenses like insurance, property taxes, and maintenance. Many couples open a joint account for these recurring expenses.

First-time homebuyers often underestimate maintenance costs. It’s wise to save a ‘house emergency fund’ of 1-3% of your home's value. Additionally, life insurance becomes crucial to ensure that your partner can manage mortgage payments and house expenses if something unexpected happens.

Combining Finances After Having a Child

Having a child significantly impacts how couples manage their finances. There’s a shift towards greater transparency and saving more in joint accounts for shared goals, such as vacations and education. Despite this, over 80% of couples maintain private bank accounts or investment accounts.

Life insurance and wills become essential to protect your family. Life insurance ensures financial stability, while a will provides your partner with quick access to savings for daily expenses.

Combining Finances If You Don't Plan to Get Married

Many couples in long-term partnerships manage their finances similarly to married couples, using both individual and joint accounts. Understanding the laws around “domestic partnership” is crucial, as these are less comprehensive than marriage laws. Considerations include:

  • Shared Major Expenses: Ensure a plan for managing these if something happens.

  • Life Insurance: Name your partner as the beneficiary.

  • Financial Decisions: Document your intentions (e.g., power of attorney).

  • Asset Inheritance: Create a will to protect your partner and prevent disputes.

Planning for worst-case scenarios is essential, as the law does not automatically protect long-term partners as it does spouses.


Emily Luk

CPA, CFA - CEO and Cofounder of Plenty

Emily is the ceo and cofounder of Plenty. Started by a husband and wife team, Plenty is a wealth platform built for modern couples to invest and plan towards their future, together. Previously, she was VP of Strategy and Operations at Even (acquired by Walmart/One) and a founding team member of Stripe's Growth and Finance & Strategy teams. She began her career as a VC, and was one of the youngest nationally to complete her CPA, CA and CFA designations.

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