Ask your parents how they shared their finances. Years ago this was very straightforward. People got married, and opened a joint bank account right away. A joint bank account is a great way of sharing finances, but millennial couples are a bit different.
One of the key differences is that millennials move in together first, and take some time to marry, if ever. Also, they usually carry significant debts on credit cards, student loans and other obligations, which makes sharing finances quite challenging. The result of this is that millennial couples are simply not sharing their finances. It is said that two-thirds of millennial couples do not share finances at all, while all couples considered, this number reduces to 50%. Finances tend to be the number one source of tension in relationships.
So, should you combine everything, keep everything separate or partially combine?
Should you keep everything separate?
Keeping all separate can be quite a difficult choice. As you keep finances separate is easy to fall into judgment of your partners expenses. - “Why are you eating out in fancy restaurants if you are late on rent? Or, where is the money going? What are is your partner doing? - Keeping finances separate constructs an environment of suspicion and scrutiny. It’s harder to make plans together and even to have conversations that lead to long-term plan and life goals. The mutual support gets weaker with the lack of accountability.
Separate accounts though are essential if your partner is an indebted one. That is because creditor can be garnish into your joint account, even if the debt was only from your partner in a different account. Also, we all need privacy. Not necessarily the privacy of hiring gigolos, but on simple things, like buying a gift for your partner.
Keeping everything together makes things simpler. You’re both accountable for joint finances. The financial situation is easier to be understood and the long-term plan becomes more effective. Joint investments, joint credit and cash flow will give you both a solid picture of where you are headed, and the discussion tends to be fruitful and to strengthen the partnership. Is it? Well, it might be too-much-information as well. Maybe your coffee habits will start being scrutinised by your partner, or you may find that the hairdresser is costing much more than it should, but the reality is that we all need the little pleasures in life, and sometimes we need to overspend to be happy. A study conducted observed that 25% of couples with joint finances do financial cheating. Meaning, having a secret account not observable by the other partner. How scary is that?
The right approach, partial combination.
With so many financial gadgets nowadays, it is very easy to combine finances partially. Set up a joint current account and a joint email account just for the recurring expenses. Include here rent, mortgage, utility bills and your giffgaff bills. Also make a joint savings or investment account where both of you contribute, and join your holiday expenses, travel tickets and other things you want to do together. Keep your separate accounts and credit for your private expenses and for your daily coffee or enjoyment. We all need our privacy, but all couples need long-term planning to enjoy a successful relationship.
Conclusion and Gadgets
Whichever path you take it is important to share dreams and goals and to understand where your partner is. Helping each other is part of a fruitful relationship, and so is defining what is important for both. Separate, joint or partially combined accounts, all methods work as long as there is transparency, communication and understanding. But the simpler it is to manage, the simpler your joint life will be.
You may also use apps and tools which I will cover in a future blog post, to manage your joint finances. One I particularly recommend is Mint. Mint is easy to add income and expenses in different currencies and to set up joint budget accounts. I will cover this app in another blog post.
What about you? Do you join accounts with your partner, keep everything separate of combine partially? What would you do? Tell us your opinion?