What To Discuss With Your Spouse Before Merging Your Finances

You finally met the right person and now you want to take your relationship to the next level.  You move in together or you want to make it more official and get married.  Everything is going well and now you need to decide what to do about your finances.  Do you merge them? Keep them separate? Or a combination of the 2?

As with everything, you need to understand the risks and rewards with each option before you jump in. 

Merging your finances

What does this mean? A full merger of the finances would mean that you and your significant other put both your salaries into a joint (both names are on the account) chequing/ savings account and use that account to pay for everything.  You would also, most probably, get joint credit cards, potentially lines of credit, a mortgage, etc.  It is easier to manage a budget that way since everything is paid out from one account.

But there are risks.  What if one person already has debt when the finances are merged? Spends more money than the other person?  You need to discuss this BEFORE you merge your finances. 

When you have joint credit, you are both equally responsible for the debt.  Say your husband/ wife spends $5,000 on your joint credit card.  Whether or not you benefited from the purchase, you are just as responsible to pay back the debt.  So if your significant other chooses not to pay, the credit card company can ask you for the money.

Keeping your finances separate

You may want to have separate accounts and each of you take care of specific things (rent, food, hydro, car, etc).  Again, if one person does not pay their fair share, the other person will have to pick up the slack.

You both need to be on the same page as to how you want to spend and save your money.  If there is no communication, it is possible that one person can spend, spend, spend and the other person has to clean up the resulting mess.  This leads to stress, frustration and an emotionally charged situation.

This is why open communication is crucial at the beginning of the relationship.  So enjoy your new- found romance but remember to talk about your financial goals.