How to merge your finances as a couple

It may feel like there is never a good time to discuss finances with your partner – married or unmarried – but it’s necessary. And an important issue that needs to be discussed is whether you should merge your finances.

Joining all your money matters can seem overwhelming at first, but you don’t have to combine every bank account and credit card from the get-go.

Start by having an honest discussion regarding your individual money management and financial commitments before deciding to merge or co-manage your household finances while deciding if you want to fully merge all your finances. Detail all individual income, expenses, and all your financial commitments.

The best way to achieve this would be to first take your individual budgets and combine them.

This will tell you what you can and cannot afford as a couple. If one partner does not usually budget, this is a chance to start doing so, as this will ensure that your household finances are under control.

Before you think about merging your finances, be open and honest about:

• How much you earn – what is the income that you will bring home? What is the frequency of your income? Are you permanently employed or a contractor?
• What are your current individual expenses and financial commitments? List your assets and your current debt.
• Your individual financial goals and money management techniques. Don’t worry if you haven’t figured this out at the time of merging your finances; the important thing is to be open and honest so that you both build a stronger money foundation.
• Disclose your financial obligations. This can become very tricky if left too late and may cause unnecessary tension in the relationship.
• What are your goals as a couple – what is the purpose of merging your finances?

Married couples can formally or informally merge their finances, as detailed above, where household expenses are split between the couple (the split could be 50/50 or any fair split agreed upon by the couple, which could be based percentage-wise depending on their respective incomes). Some couples tackle finances by adopting the ‘pick a bill’ approach, where one person pays the water and electricity while the other covers the food.

Being married does not mean that you need to be limited to having one joint account.

However, you may want to open a joint account where you both deposit money to pay your monthly household expenses, as an example.

The top five things to remember when merging finances as a couple:

• Be able to manage your own finances before expecting another person to merge their finances with you;
• Be mindful of your potential spouse/life partner’s money management behaviour and skills to see if there are certain things you can address together before considering merging your finances;
• Always keep an open line of communication – honesty is the best policy;
• Set a limit on the amount of money you can each spend without having to consult each other; and
• Don’t forget to change your wills and beneficiaries on pension or provident funds as required.

Nelisiwe Ndlovu is a certified financial planner at Alexander Forbes.

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