Couples Money Management: Merging Finances

Would you believe that sharing money makes couples happier? According to new research, joint investments promote and likely enhance relationship quality.

The findings, published in the Journal of Family Issues, indicate that non-engaged cohabiters with joint banking have levels of relationship quality similar to engaged cohabiters.

The research, carried out by PhD professors at the University of Iowa, suggests combining financial resources might be a marker of commitment for non-engaged couples.

The Commitment of Merging FinancesNavigating a Delicate Subject

Money is such a powerful force in relationships because it symbolizes different things to different people – love, security, power, control, and materialism. Money is also a sensitive subject in general, particularly in a relationship. So when you combine two people who may have different financial views and backgrounds, you’re bound to have some conflict.

Dr. Keli Ryan Steuber, assistant professor at the University of Iowa and co-researcher, says that “joint finances are a complicated relationship that’s not often spoken about, but is a natural progression in a committed relationship.”

According to the research, 59 percent of marriages involved premarital cohabitation – which is considered the primary path to marriage.

Despite these statistics, merging finances prior to or in marriage is a decision all couples will eventually have to face.

“Opening up a dialogue about money is vital. In my practice, money issues are the number one underlying problem that leads to the demise of a marriage. If you’re not willing to talk honestly and openly about your finances, then you’re setting yourself for a very tumultuous or failed relationship,” says Henry S. Gornbein, a family-law attorney in Birmingham, Mich. and divorce blog writer for the Huffington Post.

Building a Solid Financial Foundation

Setting the right financial foundation for your marriage begins with honest, open discussions early in the relationship – ideally before marriage.

Gornbein says taking an honest approach to finances is the best way to start and maintain a healthy fiscal relationship.  “Sit down and tell it like it is…be truthful about your income, investments and debts. Many people don’t  want to come clean about their money history and habits. Facing economic realities can be very uncomfortable, but it’s a fundamental step in building a strong relationship.”

Merging your finances may sound daunting, but it’s nothing to fear. There are methods couples can implement to reach a successful integration of finances.

Discuss financial goals

It can be helpful to think about what goals you want to accomplish financially as a couple. Identify both short and long-term goals. Short-term goals might include paying off debts, increase savings, or saving for a dream vacation. Longer term goals could be buying a home, starting a family and saving enough money for a secure retirement. suggests focusing in on goals you both deeply share – and identify those by coming up with your own list of goals – then share and compare them.

Create a budget

By creating a budget together, you are establishing how much money you have to spend and save. Start by determining household needs: rent/mortgage, groceries, utilities, car payments, debt payments and insurance premiums.  These are recurring obligations and are usually the easiest to budget.  Once you have determined your household needs, you can begin budgeting for individual needs: dining out, clothes and other personal items.  Carol Pepper, CEO of Pepper International, a wealth management organization, says “if you’re willing to start budgeting together and really do it as a team – and have a ‘his money, her money, our money approach’ –  then  you’re going to be able to avoid money fights.”

Mingling your money

One size does not fit all when it comes to money management.  Some couples may prefer pooling all funds, for both convenience and ease, while many couples want to retain their separate financial identities. Some couples may feel a combination of both is the perfect financial fit.  Couples should examine both the benefits and drawbacks of joint and separate bank accounts. proposes a “Three-Pot System” where  couples have a single joint account,  from which three sub-accounts emerge: an account for 401(k)-type savings, a discretionary spending account and a programmed savings account for long-term goals.

Teamwork Matters

Whatever your financial goals, working towards them together promotes a sense of teamwork in a relationship.

Gornbein advocates laying everything out on the table. “Tell the truth – share the good, bad and ugly. It’s like building a house – you want a strong foundation. Finances are an important part of building a strong foundation in every relationship and in life – how we live, what we have, what we save and what our future is – communication on all levels is critical.”

“Finances are a huge part of people’s lives and conflict in relationships. It has the potential to cause stress, but if communicated about productively, it can actually align with a sense of commitment that can enhance a relationship,” says Steuber.


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