When you join hearts, you may consider joining your finances, too. But what is the best way to invest as a couple — jointly, separately, or a mix of both? Deciding what option is right for you takes a lot of consideration. Here is a guide to help you and your partner navigate this monumental decision.
Open up the lines of communication
No matter whether you choose to merge or not to merge finances, you need to be open and honest with each other. Not only about debt and money habits, but also about your financial goals individually and as a couple. Examining each option and being forthright about how you feel will help you align your money as harmoniously as possible.
“Just as honesty is crucial to any relationship’s success, honesty is essential in any discussion about money,” advises Kate Anania of Investopedia.com.
Staying separate
Your new couplehood can begin with each of you maintaining separate accounts. It’s actually a good starting point for couples, according to Anania, since this is what you’re both used to doing — managing your money on your own.
“When couples move in together, there will likely be at least some income difference, not to mention debts that may be brought into the relationship. A separate accounting system can help clarify income disparities, debts, and potential spender-versus-saver personality conflicts,” she adds.
If you continue to maintain separate accounts, you and your partner will need to determine who pays what and how you two will save for the future or budget for items you purchase together. Although separate accounts allow you more freedom to handle your own money, it may take a lot of communication and work to keep things on track, which may get even more complicated if you add kids to the mix, she warns.
Joining forces
Choosing to invest as a couple, meaning sharing your financial accounts, allows you a more streamlined approach to your finances. If you have one bank account for both of you, for example, you both have access to it without any fuss, according to TheBalance.com’s Jeremy Vohwinkle.
“Couples with joint accounts may find it easier to keep track of their finances because all expenses come out of one account. This makes it harder to miss account activity, such as withdrawals and payments, and easier to balance the checkbook at the end of the month,” he adds.
With the added convenience of a joint account, you are sacrificing financial freedom, notes Vohwinkle, and you might put your savings at risk if your partner is bringing outstanding debt to the table. And if the worst happens and you both go your separate ways, dissolving or separating your account isn’t easy.
Best of both worlds
If you are hesitant to give up any financial independence but want to work with your partner to save for the future and spend in the present, you might consider doing a hybrid approach to money management.
“Committed partners can choose to maintain separate accounts and also open a joint account in which they deposit a portion of their income that they both agree on,” advises Vohwinkle.
To determine what approach makes the most financial sense for you and your partner, you’ll need to crunch some numbers, be honest about your finances, and work together to find the solution that makes you both happy.