Relationships and money: when is the right time to combine your finances?

It’s such a personal question that it’s impossible to answer definitively, but we have some guidance.

For some, finances are combined after you marry. Others may choose to do this earlier, or not at all. But what if you don’t plan on getting married – like Luke and I? (sorry, parents)

Right up front, the only firm answer to this question is: the right time to combine your finances is when you both want to. Whenever you’re ready. And this can be early on in the relationship or never. 

There is no wrong answer.

But to give you a bit of an insight into how you can manage finances as a couple, here’s how I have done it in the past.

Combining your money: The 50/50 method

I have friends who do and it works for them. 

While it works for them, there are a few issues that present themselves here. Mostly because expenses in a relationship are never 50/50. 

One person usually eats more of the groceries. One person often earns more. So does it actually make sense to split your groceries and bills by half? 

But regardless of what I think, this is something that a lot of people do. They split the cost of joint expenses down the middle. Normally this would be one person pays, and the other person transfers half the funds.

The good thing about this is that it’s simple. It’s clear cut, and it’s often a really good way to manage money at the beginning of a relationship.

Combining your money: The “it all evens out in the end” method

Once you’re more comfortable with each other, some people start using this method.

It worked well for us over two years, for example. 

When Luke and I first started dating, we kept our money separate but took turns to buy things like breakfast or groceries under the premise, it all evens out in the end. 

Neither of us are the type of people that like to count cents or dollars. It’s not a fun or sexy conversation negotiating who needs to transfer who $10. 

So we just took turns shouting joint expenses. This worked well until we moved in together, and then things got a little more complicated.

Combining your money: The joint-account method

If you get to the stage that you move in together, you’ll find that you start having a lot more joint expenses. So, constantly transferring money back and forth or counting who paid for what can get very tedious.

Opening up a joint bank account can be a fix here. 

The way you can manage this simply at the beginning is that you both transfer an agreed amount of cash into this account and then all your joint expenses are then paid out of this account. 

You can choose to put the same amount of money in or you can choose for one person to add more or less.

But in essence, bonds, bills, rent and groceries can all be paid out of the joint account and everything else you can manage separately.

Combining your money: The ‘joint credit card’ method

This is the method that Luke and I used once we moved in together. 

We kept our personal finances like savings accounts and everyday spending separate. But we got a joint credit card for shared expenses.

This worked really well for us. We got a card that gave us good deals on frequent flyer points, plus bonus points which helped pay for a future holiday. 

It also allowed us to deal with expenses as they came along and not have to commit a certain amount of money into a joint account.

We also chose to pay our expenses proportionally. Despite working in the same industry for our entire adult lives, Luke and I were paid very differently. 

I won’t get into the gross sexism here, but we sat down and looked at all the money we have coming in per month after tax. I made 35% of our take home cash and he made 65%. 

It didn’t feel fair for us to split expenses 50/50 so we chose to split at the ratio at which we earned. Once our credit card statement came in, Luke paid 65% of the bill and I paid 35% of the bill.

We kept our personal expenses separate. The coffees or clothes we bought were paid from our own individual accounts. But anything shared went on the credit card which we paid proportionally.

This is not an endorsement to get a credit card by the way, unless you can absolutely 100% trust yourself to pay off that card, it might not be the best idea for you. 

Credit cards should be treated with caution and if you have question, talk to an accredited financial advisor (which is definitely not us). 

Please don’t make a big financial decision like this based on what you read on the Internet, without getting the proper advice first.

Combining your money: The ‘all in’ method

After Luke and I bought our apartment, we chose to go all in. It was too difficult keeping half our expenses separate and the other half joint was getting exhausting. 

And it became super-complicated once we owned property together. We both made a note of the amount we each put into our house deposit, you know, just in case. But after that it’s all in together.

Our home loan came with an offset account, so when we each get paid, we put every cent into our offset. Both of us. 

We continue to use our joint credit card, only now we put everything on it. Gifts, coffees, clothes, gadgets – everything. Then when the credit card bill needs to be paid, we pay it out of the money in our offset account. 

No more counting, no separate bank accounts. It’s just the easiest way for us.

Putting everything on the credit card allows us to earn a tonne of frequent flyer points. And keeping all our money in our offset account allows us to pay as little interest as we can on our home loan. 

This method of money management gives us a few perks.

It does mean you need to be open and talk regularly about expenses. We set ourselves a monthly budget of what we’re allowed to spend as a couple – so we’re still saving and not just spending it all. 

And we keep each other across when we might have a big expense coming up so that we can adjust our spending if need be. 

For example, Luke needs to have some pricey dental work done recently, so I made sure that we were both spending a little more frugally that month so we could stay on budget.

It works well for us.

Think before you act

Combining your money is a big step, and not one you should take on lightly.

If you both have different attitudes to money, it can be a really hard step to take. 

If one of you is a frugal spender who likes to save their money, but the other person likes to live paycheque to paycheque, then it’s going to be hard to find a balance that suits both of you.

From my experience in being in a long term relationship, I would say that this is a step you need to consider at length before proceeding. 

You need to talk to each other and be totally open about where you both are financially. Combining your money won’t work if one of you has a secret debt. Or if you’re not on the same page about saving.

Talk to each other about it, be honest and find a solution that works for you.

I know couples that have been married for years without combining finances. There’s no right way to do it, It’s about what suits you both best.

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If you want to start using a card to collect frequent flyer points, heres how we did it.

Photo by Khamkéo Vilaysing on Unsplash