There has been an increasing trend where couples are together and in a committed relationship but keep their finances separate and only contribute to the joint bills – with everything else remaining independent.

I am unsure where the trend started but I suspect it is driven by high divorce rates, gold diggers, individual debt, and unequal earnings, as well as the couple’s general desire to maintain financial independence so they do not need to justify their spending to each other.

I always thought it was quite odd if a couple had been together a long time and lived together but did not combine their finances. However, when my sister, who was the financially responsible one and the moneymaker, got divorced, I saw why having your finances separate was not necessarily a bad idea.

Now don’t get me wrong, laws equalise a lot in divorce, but there’s always a party who ends up better than when they went in, and it does not take much to figure out my sister was on the losing end.

She was very adamant after the divorce that she would never combine finances again, and although she has met someone since then and they have been living together for a number of years, their finances are completely separate.

Not only that but they have a legal agreement in place that does not allow either party to have rights to each other’s assets should their relationship sour.

In this case I can see she learnt a hard lesson – and one she never intends to repeat. However, on a larger scale, the question that must be asked is this: should you combine your finances or keep them separate?

In 2023, Emily Reynolds published an article in The Psychologist, the official publication of The British Psychological Society, suggesting that merging money may boost marriage longevity.

Reynolds noted that a couple’s short- and long-term goals are predominately aligned with a financial commitment. Therefore, if the couple is committing to the goal together, then their finances will naturally follow suit and be combined.

In contrast, a 2024 article published by CNBC entitled “Gen Z couples are more likely than older generations to keep finances separate”, noted that 38 per cent of Gen Z couples surveyed in the USA kept their finances separate, citing two main reasons for doing so:

1, Shame over the level of debt they had – student loans, car loans, and credit cards

2, They don’t want their partner to turn into a pseudo-parent

On the other hand, the article suggested that baby-boomers were the highest ranking generation to have their finances combined from day one. However, it also noted that this was primarily driven in an era where often, only one person went out and worked full time, while the other stayed at home (Sofia, 2024).

I am not sure there is any right or wrong answer to combining finances. Most of us can attest to the occasional heated conversation about money in the household (it certainly happens in my house). However, from my perspective, combining finances or keeping them separate is often about one’s attitude towards money or how the attitude towards money differs between couples.

Some spouses enjoy the power and control money gives them in the relationship, especially if one spouse is not working and the working spouse is making significant money. I can certainly attest to being in earshot of many conversations which included the phrases “if he allows me to buy it” or “I will have to ask him if I can”– I’m not sure if either of those phrases derives from an equal view of a relationship. Moreover, if even if the finances are joint, the control over the finances certainly isn’t.

Let’s face it, in most couples you have a spender and a saver, and chances are the spender would prefer to combine the finances while the saver probably at some point wishes they never had. Again, it comes down to the individuals and whether the differences in their attitude towards money can be overcome in order to unite their finances, allowing them to create goals together and focus on planning for the future financially.

My husband and I combined our finances when we got married. We didn’t have much between us and we grew our money together; there were times he earned more and there were times I earned more. However, looking back at the few times when our salaries were quire different I remember saying to him a couple of times, “well I earn more so I should spend more,” which of course is a terrible, childish thing to say. Let’s face it, it isn’t a game of “tit for tat” – we combined our finances to achieve our goals and build a future together.

However, I would be cautious about combining finances if one of you has debt. Let’s face it, it’s baggage, and it is not the responsibility of the other to pay it off. Perhaps there is a viable reason for the debt, mortgage, car loan, or student loan, but as the debt was accumulated prior to the relationship, the finances should remain separate until the debt is cleared. It is important to start on a clean slate.

On the other side of the coin, if you both have investments then combining your finances increases your economy of scale, meaning you could potentially benefit from lower annual fees.

Ultimately, once you are in a committed relationship it is really important to discuss your finances to find out whether your views align or are completely different. Once you figure that out, you will be able to determine what is the right fit you.

References

Reynolds, E. (2023) Merging money may boost marriage longevity. Available from: https://www.bps.org.uk/research-digest/merging-money-may-boost-marriage-longevity [Accessed 6 September 2024].

Sola, A. (2024) Gen Z couples are more likely than older generations to keep finances separate. Here’s why. Available from: https://www.cnbc.com/2024/02/08/why-gen-z-couples-tend-to-keep-finances-separate.html [Accessed 6 September 2024].

• Carla Seely has 24 years of experience in the financial services, wealth management and insurance industries. Over the course of her career, she has obtained several investment licences through the Canadian Securities Institute. She holds ACSI certification through the Chartered Institute for Securities and Investments, UK; QAFP through FP Canada; and AINS through the Institutes. She also has a master’s degree in business and management