Should you merge your finances?

Should you merge your finances: pros and cons

Contrary to popular belief, the word merger isn’t only reserved for board meetings where high powered execs make big financial decisions. In our personal lives we plan and execute mergers all the time. We get married, we move into the same home, we start sharing responsibilities. But figuring out how you will divide grocery shopping, laundry duties and other everyday responsibilities is a no-brainer compared to the momentous question of your finances.  But it’s a topic we don’t broach and review often enough as couples.


Before merging your finances:

  • It is absolutely necessary to have a transparent and thorough conversation to decide how to handle financial matters and assign responsibilities.
  • Be certain to first learn and understand your partner’s financial personality, goals, and values toward saving and spending money.
  • Make sure you disclose your past financial affairs, including credit rating and any outstanding obligations (i.e. bankruptcies or blacklisting).


Pros of merging your finances:

  • Teamwork

If your financial priorities fully align, there is nothing more fulfilling than knowing that you are in this together. By merging all your liabilities and assets, you are both looking beyond your personal needs and wants, and committing to prospering or failing – together, as a unit.

  • Simplicity

When you are living together or married, you will share many expenses. It makes a lot of sense to keep the cash that pays those bills in one account that you both fund. Additionally, merging your loan accounts can help you secure other loans in the future and even improve your credit scores.

  • Taxes

Without a doubt, filing separate returns might be advantageous in some circumstances. However, for some couples, merging finances and joint filing will help save time, and can result in substantial savings. This is particularly true in cases where one spouse earns a higher income than the other.

  • Building a family

Children are the ultimate joint-venture project. It will feel nearly impossible to divide the money you spend on kids. If your child’s health insurance plan comes from dad’s job benefits, does that count as part of dad’s contribution? If mom normally watches the child but today she needs a babysitter, does she pay, or is that a shared cost?


Cons of merging your finances

  • Attitudes

If your financial philosophies do not align, and you are merging your financial life with somebody who has very different habits, systems, expectations, goals and ideals, this can bring challenges and unwanted conflict.

  • Dependence

If you have been managing your cash on your own, successfully for many years you might not want to give up your financial autonomy. There might be more book-keeping, but ultimately you get the comfort and independence you desire.

  • Disentangling

Nobody plans to have an unsuccessful marriage or partnership, but life is full of surprises. Bank accounts, joint home loans and credit cards, can be quite hard to separate.

  • Different Investing Strategies

Your partner might be a security-seeker who prefers to invest in bonds and money market accounts, while you’re a risk-taker who prefers to invest in emerging market funds or buy individual stocks. When you join finances, you will need to agree on an investing strategy.

  • Portfolio Allocation

Your own portfolio might be perfectly balanced relative to your own age and goals, but once you combine finances you may find that you both need to rebalance.

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