Pairing up? How to know when it’s time to combine your finances

Money may not come first when you’re in love, but it deserves serious consideration if you want a lasting relationship.

A partnership that pools resources and shares expenses can be a very good thing for a relationship and for each other’s financial well-being. But different consumption and saving habits can also become a permanent source of conflict for couples.

From a household finance management perspective, sharing a bank account can make things a lot easier.

“Money stresses people out,” said Douglas Boneparth, a board-certified financial planner and president of Bone Fide Wealth in New York. “In general, the fewer moving parts, the better.

“When you’re paying bills and depositing checks to and from an account, it’s easy to see what’s coming in and what’s going out.”

This in turn forms a good basis for jointly drafting a budget and setting financial goals. It also gives both partners a good grasp of each other’s spending and saving patterns and can potentially highlight issues that need to be worked out.

Boneparth suggests that it’s better to educate yourself about a partner’s spending habits, their debt obligations, and their overall financial situation sooner rather than later.

“Ideally you want to flesh everything out before you tie the knot,” he said. “These things can break relationships.

“It’s about trust and honesty,” added Boneparth. “You have to address problems, find solutions and support each other.”

Having a joint bank account is one thing, but pooling fixed assets, sharing ownership interests in real estate and other property is another. While people can and should name beneficiaries for investment accounts and other assets, pooling assets and accounts with a partner may not always make sense.

In fact, there can be a variety of personal, financial, and tax reasons why it might be best for a couple to pool or keep assets separate.

“There is no one-size-fits-all solution; it’s a matter of individual preference,” said Boneparth. “There can be good reasons to keep some accounts separate and to allocate assets and liabilities in different ways.”

For example, a person may have business interests, property, or an inheritance that they wish to keep separate from a relationship. In some cases, it could be about ensuring that one spouse does not face potential liability that the other partner bears as a business owner or professional. In other cases, it may simply be the personal choice of one or both partners to manage their finances separately.

The context of combining or dividing assets is often viewed under the guise of a prenuptial agreement prior to a legal marriage. For example, the parents of a spouse might be concerned about protecting the property they intend to pass on to their engaged child.

Of course, this process can be a source of friction and pain between a couple, but it’s important to address these issues beforehand and resolve any emotional issues.

So that spending, saving, earning and inheriting money in a relationship does not become a topic of conflict, the only thing you can do is make sure that you put everything on the table and discuss it.

“The universal solution to many of these problems is just solid communication,” said Boneparth, who is married himself. “That’s what makes a good relationship overall and a good financial partnership in particular.”