A guide to approaching shared finances with your partner

Key Takeaways:

• There are different approaches for covering shared expenses. Bills can be split evenly or proportionally, based on respective income.
• Share what each of your financial priorities are: retirement, buying a home, paying off debt…etc., to ensure you are on the same page. Set well-defined financial goals together to keep each other accountable and ensure you achieve your priorities.
• You can take some extra steps to protect your individual and collective financial wellbeing: like creating a mutual contract or having conversations in advance about ownership of important assets.

Whether you and your partner have talked for a while about getting more serious, you’re approaching blending families, or if your relationship is unexpectedly on the fast-track, now is the time where finances take on greater importance. Money is a complex topic, especially when two people are thinking about merging their financial lives. Here are a few important questions to consider along the way.

1. Should we have the “money talk”?

Yes, and having those conversations sooner rather than later is one way to help set your partnership up for success. If you wait and have this conversation further down the line, you might find yourselves on different pages – as was the case with this couple who were guests on our “Friends Who Talk About Money” podcast. They only had their first serious money talk after they moved in together a couple years into their relationship.

Start by talking about your mindset when it comes to finances, sharing your financial priorities – such as paying off debt or saving for retirement. As you become more comfortable, you can get more specific, sharing things like credit scores¹ or specific debt totals. It may take time but being able to talk openly about money can help to set expectations² and avoid unwanted surprises in the future. Remember, the “money talk” isn’t just a one-time discussion but should evolve as the relationship grows.

2. Do we need to blend our finances?

There is no blanket yes or no answer; it depends on your comfort level. Some financial advisors suggest that couples set up one joint checking account for main bills, including rent and utilities.³ There are two ways to fund this account. Some couples use a proportional method, where each person contributes an amount that’s proportional to their income. This might make sense if one person makes significantly more than the other. Another way is for both people to add the same amount of money to cover the bills, which can work well if their incomes are roughly equal.⁴

Couples can still have separate accounts where they set aside money that they normally wouldn’t spend on things involving their partner. You might want to keep credit cards separate, too.⁵ This gives you more control over your credit score and how you manage any balance owed.

3. What’s the best way to split the bills? 

Again, there is no one way to do this. Some financial experts suggest splitting daily shared expenses down the middle, such as utilities, internet, or groceries,⁶ while separately paying other expenses such as your personal cell phone, individual car payment or student loans.⁷

Beyond those daily expenses, make plans about bigger non-regular expenses that are still part of couplehood. Some experts suggest setting caps on how much either person can spend in a single transaction before asking the another, even if it’s your own money.⁸  For recurring purchases, couples should define together what is a “need” and what is a “want” as these are different for everyone.⁹

4. How do we set shared financial goals?

This is a great time to sit down and have a discussion with your partner. What do you both want to accomplish together? This may be saving for a vacation, building an emergency fund, paying down debt or saving for a down payment on a home.¹⁰ Make saving for retirement a key part of your overall financial plan, even if you are saving in separate accounts.¹¹

By creating goals together you can hold each other accountable.¹² Make savings goals clear and set a date for when you want to reach them.¹³ Setting shared goals is a great way to ensure you are on the same page financially and may also help create a sense of deeper partnership.

5. How can I best protect my financial wellbeing?

Before you consider moving in together, or at least early into sharing a home, make a contract that covers things that are individually important to you both.¹⁴ The contract should include pets, expensive personal items you bring into the relationship, and who stays in the property if you decide to live apart instead.¹⁵

If you are purchasing property together discuss how the property will be divided – whether it will be put up for sale or if one person buys the other out.¹⁶ Making a list of these important possessions may take time; however, it’s an important way to safeguard you both.¹⁷ This is particularly important step if you and your partner are also blending families.

No one can predict the future, but you can plan for it. No goal is too big, nor too small, and having a trusted advisor can help you see opportunities that you might otherwise miss. For further tips and financial advice about how to make informed decisions and develop a plan for the future, connect with a John Hancock expert today.

Citations:

^{1, 2} Business Insider: “8 ways to talk to your partner about money, especially when you just started dating: Talk about your financial expectations early on” by Natalia Lusinski, April 29, 2019 https://www.businessinsider.com/personal-finance/money-relationship-advice-2019-4#talk-about-your-financial-expectations-early-on-1

^{3, 6, 8, 14, 15, 16, 17} U.S. News: “7 Tips for Sharing Finances in a Long-Term Relationship” by Danielle Maddox, July 2, 2014 https://money.usnews.com/money/personal-finance/articles/2014/07/02/7-tips-for-sharing-finances-in-a-long-term-relationship

⁴ The Balance: “3 Methods for Combining Finances as a Couple” by Paula Pant, July 18, 2020 https://www.thebalance.com/three-methods-for-co-mingling-a-couple-s-finances-453849

⁵ The Money Advice Service: “Should you manage money jointly or separately: Protecting yourself and your family” https://www.moneyadviceservice.org.uk/en/articles/should-we-manage-money-jointly-or-separately#protecting-yourself-and-your-family

^{7, 9} Ellevest: “How to Split Expenses With Your Partner” by Ellevest Team, March 19, 2019 https://www.ellevest.com/magazine/family-relationships/split-expenses

^{10, 13} The Balance: “How to Budget as a Couple” by Miriam Caldwell, September 16, 2020 https://www.thebalance.com/how-to-budget-as-a-couple-2385692

¹¹ Business Insider: “8 ways to talk to your partner about money, especially when you just started dating: Figure out what you want to know then ask accordingly” by Natalia Lusinski, April 29, 2019 https://www.businessinsider.com/personal-finance/money-relationship-advice-2019-4#figure-out-what-you-want-to-know-then-ask-accordingly-7

¹² Business Insider: “8 ways to talk to your partner about money, especially when you just started dating: Create money goals together and hold each other accountable” by Natalia Lusinski, April 29, 2019 https://www.businessinsider.com/personal-finance/money-relationship-advice-2019-4#create-money-goals-together-and-hold-each-other-accountable-5

Financial planning and investment advice provided by John Hancock Personal Financial Services, LLC (“JHPFS”), an SEC registered investment adviser. Investments: not FDIC insured – No Bank Guarantee – May Lose Value. Investing involves risk, including loss of principal, and past performance does not guarantee future results. Diversified portfolios and asset allocation do not guarantee profit or protect against loss. Nothing on this site should be construed to be an offer, solicitation of an offer, or recommendation to buy or sell any security. Before investing, consider your investment objectives and JHPFS’s fees. JHPFS does not provide legal or tax advice and investors should consult with their personal legal and tax advisors prior to purchasing a financial plan or making any investment.