There comes a time in every relationship when finances move beyond “yours” and “mine” and start to become “ours.” This might be sparked by a decision to move in together, tie the knot, or simply make a bigger commitment to your shared future. Suddenly, you’re not just managing your budgets, but navigating the complexities of shared expenses, joint goals, and perhaps even a joint bank account. This transition can be exciting, but it also brings a unique set of challenges.

Take Mark and Lisa, for example. They were thrilled to be moving in together, but quickly realised their spending habits were worlds apart. Lisa, the spender, loved to indulge in spontaneous shopping sprees, while Mark, the saver, preferred to keep a close eye on his budget. Their differing approaches led to more than a few disagreements and growing resentment.

To overcome this hurdle, they decided to create a joint budget that included a “fun money” allowance for each of them and their discretionary spending. This way, Lisa could enjoy her shopping without derailing their shared financial goals, and Mark had the peace of mind of knowing their overall finances were on track. By compromising and communicating openly, they found a solution that worked for both of them.

Just like Mark and Lisa, every couple will face their unique financial hurdles. But with open communication about finances, a proactive approach, and a willingness to understand each other’s perspectives, you can build a strong and secure financial future together. Steps to overcome frustrations and tension around money in your marriage include active listening, respecting each other’s perspectives, and finding compromises that work for both of you. With open communication and a proactive approach, you can build a solid financial foundation for your future together.

Communicate and Create Your Financial Roadmap as a Couple

Before you even think about combining finances, understand your individual goals on money, financial situations, and financial habits. This means having honest conversations about:

• Income SourcesWhat are your incomes? Are there any side hustles or investments to consider? Is there any income disparity?
• Current Spending Habits: Are you a spender or a saver? Track your expenses to get a clear picture.
• Debt: Do you have any outstanding loans, credit card debt, or student loans? Be transparent about the amounts and repayment plans. And maybe come up with some debt management strategies.
• Financial Disparities: Is there a significant difference in your incomes? Will one of you take time away from work to raise the kids? Or perhaps one of you needs to provide child support for children from a previous marriage? These might be things you need to address in your shared finances.
• Risk Tolerance: Are you comfortable with investments or prefer a more risk-averse approach? Agreeing on if and how you’ll invest if you both choose to have one.
• Emergency Fund: Do you have savings set aside for unexpected expenses?
• Credit Reports and Credit Score: It’s also a good idea to discuss your credit reports and credit scores, as these can impact your ability to secure loans or rent a property together.

For more information on this, you could read our comprehensive 12-step guide to creating your financial plan. Learn how to set financial goals, create a budget, develop an investment strategy, and plan for retirement, all while protecting your family and building wealth.

Setting Shared Goals

Once you have a good grasp of your finances, it’s time to start thinking about your shared financial future. What are your common goals as a couple? Do you want to buy a house, travel the world, or start a family?

Setting clear life and financial goals will help you prioritise your spending and saving. Using the SMART goals framework (Specific, Measurable, Achievable, Relevant, Time-bound) can be particularly helpful when setting these financial targets.

Making Money Talks a Habit

Communication is key to a healthy financial relationship. Make it a habit to talk about money regularly. This doesn’t have to be a formal budget meeting every week, but it should be an open and ongoing dialogue. Have regular financial check-ins with each other about spending, saving, and any financial concerns that may arise.

Saving money as a couple requires teamwork and a tailored approach. Since there’s no one-size-fits-all solution, experiment with different budgeting methods until you find one that suits your unique needs and preferences. Work on getting on the same page when it comes to your financial goals and priorities (this might take some time and vulnerability!) – this shared vision will keep you motivated and working together. Finally, recognise and play to each other’s strengths. If one of you is a budgeting whiz while the other excels at finding deals, leverage those skills to create a balanced and successful financial partnership.

Overcoming common financial hurdles often requires a shift in mindset. Mutual respect, with clear boundaries and maintaining open and honest communication, will help you navigate your inevitable differences. Defusing any developing resentment, or feelings of shame about any uncommunicated ‘financial mistakes’, will be vital to achieving a strong financial partnership.

Important Conversations

Open and honest communication is the bedrock of any successful financial partnership. Here are some key and sometimes even difficult conversations to have with your partner:

• Splitting Costs: Before merging finances, decide how you’ll divide shared expenses like rent, utilities, and groceries. Will you split everything 50/50, or will you contribute proportionally based on your individual incomes? Finding a system that feels fair to both of you is essential.
• Combining Savings: Combining savings is a big step. If you choose this path, make sure you’re both crystal clear on your shared savings goals. Are you saving for a house deposit, a dream holiday, or a comfortable retirement? Ensure you have a mutual understanding of how those savings will be used and when.
• Long and Short-Term Goals: Don’t forget to discuss your individual and shared financial aspirations. Do you dream of early retirement, starting a business, or pursuing further education? Talking about both short-term and long-term goals will help you align your financial priorities and work together to achieve them.

Combining Finances: Three Approaches 

When it comes to managing money as a couple, there’s no one-size-fits-all solution. Each approach has its own set of advantages and disadvantages. Let’s explore the most common methods.

Separate Accounts

Keeping your finances separate offers the highest degree of individual financial freedom. Couples maintain their accounts and are responsible for their spending and debts. They may split shared expenses equally or proportionally based on income.

Joint Accounts

In this approach, all income goes into a single shared account. This simplifies budgeting and expense tracking, providing a clear picture of the couple’s finances.

Pros: It’s easy to track family spending, no need to divide expenses, adaptable to changing family needs. This approach can make it feel easier to work together towards common goals, and strengthen trust and unity.
Cons: There is more potential for conflict due to differing spending habits, lack of individual financial freedom, and difficulty keeping gifts secret. Another downside is this one partner maintains more control of the joint finances, it may limit the financial independence of the other partner.

Hybrid Approach

This method combines the benefits of both separate and joint accounts. Couples maintain a joint account for shared expenses and individual accounts for personal spending. A predetermined amount is transferred to personal accounts regularly.

Pros: Balances individual freedom with shared financial responsibility, simplifies bill paying while allowing for personal spending and encourages joint goal setting and retirement planning.
Cons: Requires managing multiple accounts, the fixed personal allowance might feel restrictive to some.

Which approach best suits you? The best approach depends on your circumstances, communication style, and financial goals as a couple. Openly discuss your preferences, spending habits, and financial priorities to determine what works best for you.

Key Relationship Stages & Your Finances

Dating

Keep your financial freedom and get to know each other. Enjoy the early stages of your relationship without merging finances. Split costs fairly and openly discuss your comfort levels with spending.

A joint account for shared activities can simplify things. Consider opening a joint account for shared expenses like date nights or weekend trips. This can make it easier to track shared expenses and avoid awkward money conversations.

Moving in Together

Open a joint account for household expenses. This can include rent, utilities, and groceries. Contribute to the account proportionally to your income. Maintain separate accounts for personal spending. This allows you to retain your financial independence and avoid arguments about spending habits. Discuss financial goals, habits, and any existing debts. This will help you build trust and avoid financial surprises down the road.

Engaged

Create a joint savings account for wedding expenses and future goals. This will help you stay organised and on track with your financial goals. Engage in serious financial planning. Discuss long-term goals, such as buying a house or retirement planning. Consider investment strategies and how you will manage your finances as a married couple. Consider consolidating debts if beneficial. This can help you save money on interest and simplify your finances.

Married

Choose a joint savings strategy that works for you. This could involve keeping separate accounts for personal spending and a joint account for shared expenses or merging all of your finances into one account. Continue to communicate openly about your finances. This will help you stay on the same page and avoid financial disagreements.

Additional Considerations

Financial compatibility is important. Before merging finances, make sure that you and your partner are on the same page about money management. Merging finances is a big step. Take your time and don’t feel pressured to merge your finances before you’re ready. Seek professional advice if needed. A financial advisor can help you create a financial plan that meets your needs. Remember, there is no right or wrong way to merge finances. The best approach is the one that works for you and your partner. Communicate openly and honestly about your finances, and be willing to compromise.

Life throws curveballs. Discuss how you’ll handle situations where one partner may be unable to work, such as parental leave, illness or even major life events.

Should You Get a Prenuptial Agreement (BFA)?

In Australia, a prenup is called a Binding Financial Agreement (BFA), and it’s essentially a roadmap for your finances if things don’t work out. It covers how you’ll divide property and assets, handle debts, and manage other financial matters like inheritances and spousal maintenance.

Prenups aren’t about anticipating failure but they should be thought carefully about. They should be mutually beneficial. If they damage trust, they have the potential to set your relationship on a rocky course, so don’t take this step lightly. If you’re considering a BFA, it’s worth speaking with a legal expert to understand how it could work for your specific situation. You can read more about BFAs here.

Building a Solid Financial Future Together

Navigating joint finances as a couple can initially feel challenging, but with open communication, mutual understanding, and strategic planning, it can pave the way for a strong financial partnership. Whether you’re merging your accounts or maintaining separate ones, the key is to stay aligned on your goals and values while respecting each other’s financial habits. Remember that each couple’s financial journey is unique, and finding the approach that works for you both is essential.

As you embark on this journey together, don’t shy away from seeking professional advice when needed. Financial advisors can provide invaluable insights tailored to your situation, ensuring you remain on track toward your shared dreams. Be proactive in discussing financial challenges, life changes, and plans to foster trust and collaboration.

Ultimately, a healthy financial relationship not only strengthens your finances but also fortifies your bond as a couple. Embrace the process, celebrate your milestones, and support each other as you grow together on this path to financial wellness. With dedication and teamwork, you can not only survive but thrive together in the realm of joint finances.