How should you combine finances with your partner?
The odds are stacked against women when it comes to economic equality and financial empowerment. And it doesn't help that financial institutions largely exclude women. The whole system needs an overhaul, but in the meantime we want to answer your money, finance and economics questions. Every week we'll answer one of your questions in a useful and straightforward way. Today's question is...
How should you combine finances with your partner?
Our opinion on this is as little as possible, although that doesn’t mean you shouldn’t divide financial responsibilities in ways that work for you.
There are no additional benefits to combining your finances in the UK - you can still apply for a joint mortgage or other joint loans, and if you choose to marry or get a civil partnership your tax and pension entitlements are not dependent on joint finances. Although in France, if you have a civil partnership or are married the total taxable income is divided by two, and if you have a child, by two and a half. Which means there can be some tax benefits.
But there are potential drawbacks such as combined credit scores, taking on debt and being more open to financial abuse.
Even if you want to pay from one place towards something, such as rent and bills, or save together in one place, you don’t necessarily need to open a joint bank account. You can use bill splitting apps such as Splitwise and Tricount (Selin uses the latter) or shared tabs on challenger banks such as Monzo or Revolut (Nat uses the latter). These don’t have to be split 50/50 either.
If you do decide to open a joint bank account, don’t use it for everything - make sure you have separate accounts as well and an emergency fund (which we’ve talked about before) as part of your individual savings. And ideally, don’t leave the joint account for one person to manage.
It may seem safer to be jointly entitled to a pot of money, particularly if you’ve decided to contribute differently. For example, if you have agreed for one person to contribute financially to the household and the other to contribute through labour. But in fact the opposite may be true. If someone is going to withhold financial support the type of account you hold has no bearing, but with a joint account they could end up racking up debt in your name, or it will just be harder to disband your relationship in general the more financially connected you are.
At the end of the day, if one partner is going to mismanage your joint commitments or goals, they are going to do that regardless of how combined your finances are, and in that instance, the more separate your money is, the better.
Action of the week: If you manage your finances with another person/people, let us know what works for you.
About us
Selin and Nat are financial journalists who met working together at a publication in London. If you are ever worried a question you have might sound stupid, we ask each other such questions all the time.
Got a question to ask? Send it to selinandnat@gmail.com and we'll try to answer it in an upcoming newsletter. All questions are anonymous. Follow us on Instagram @rebalancing_act.
Like the newsletter? Support us with a virtual coffee.
