When you’re in a committed relationship, nothing shows trust like combining your finances as a couple. However, unlike what you might believe, there isn’t just one way to go about it.
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As it turns out, you have some options. According to experts, it all comes down to what works best for you. Below are some ways for combining finances with your partner.
Completely Merged Finances (Joint Accounts for All)
According to David Milo, financial advisor and owner of Independent Lending, the advantages are simplicity and transparency, as it’s understood that through a single account, there will be less worry as to where the money went simply because both of them operated the money, so ponies are willing to take chances.
“This ideally works for those who wish to have a ‘no blame’ household and instead both equally partake in ‘managing’ the household finances.”
Clear financial goals is another advantage. “Simplifying goals is easier when both end up contributing into the same account,” said Milo.
He said this method adds clarification on common finances to couples, enabling them to strategize more effectively for combined projects like saving for a house and car, saving for pensions for retirement and more.
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Combined with Independent Accounts for Discretionary Expenses
“Together with shared living costs, there is a possibility of having separate accounts with a mild debt on them which would allow for each partner to maintain some degree of financial independence,” said Milo. “This would allow for some level of balance between being a collective and having individual identities.”
He noted there’s also less conflict over spending: “The use of separate accounts is effective, as it prevents quarrels over expenditure since each partner is in control of his or her account thus does not have to explain each purchase to the other one.”
Total Seclusion of Finances
Some of the benefits of keeping your finances completely separate, according to Milo, include freedom. “There are some couples who feel a sense of control when they have total independence over their finances,” he noted. “For instance, partners who have differing attitudes towards spending and financial priorities may be better off separating their assets.”
Here, each spouse can handle their own earnings, outgoings as well as savings without their spouse’s intervention. Milo observed there’s also clear cut finance: “There is no ambiguity on who owns what within the couple.”
As such, he explained that the couple would be better placed in avoiding conflict because financial management is done on an individual basis, and there is no risk of one person crossing the economic line of the other. “Separation of finances can foster autonomy and lessen financial strain on couples that have divergent financial upbringing,” said Milo.
However, it was noted that this method can be less effective for couples who have an aim that is financially cohesive in nature.
“Rather than making assumptions about how much each person contributed or how much they owed for common expenses, both partners in a relationship must be on the same page in terms of costs,” Milo concluded.
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This article originally appeared on GOBankingRates.com: 3 Ways To Combine Finances With Your Partner
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