Thinking of combining finances with your other half?

Couples might be open to sharing all sorts of things, but a savings account or credit card might not be one of them.

You and your partner may be open to sharing a towel after a swim, dessert after dinner, or even chores at home, but what about when it comes to your finances?

Research shows only one in five couples in Australia has a shared savings account, and one in four has a shared credit card.1

Despite the majority preferring to fly solo, there can be practical reasons for combining your finances. But there are discussions, as well as pros and cons, you should address up front.

What should we discuss early on?

There are a number of things worth discussing with your partner before you consider merging finances, including:

  • Your views on money management 
  • Secret spending habits if you have any
  • Your income, expenses, assets and debts
  • Your credit history and credit rating
  • Your individual and shared financial goals 
  • What a workable budget and savings plan might look like
  • Your contingency plan if one of you isn’t earning an income
  • How you’ll contribute/divide repayments – 50/50 or proportionate to income.

What are the benefits of shared finances?

Shared finances can work well for couples who spend money in a similar way, communicate openly and effectively about financial matters, and who trust each other.

So if you’re one of these couples, here are some advantages of sharing your finances:

  • Easier management of household expenses
  • Potentially lower fees, as one account is generally cheaper than two 
  • The potential to earn more interest as you’ve combined your savings
  • Greater purchasing power, since you’ve pooled your funds
  • Less paperwork and administration 
  • Both of you can decide how left over money is best spent.

What are the risks when merging money?

Make sure you discuss and agree on some ground rules up front so you don’t end up in arguments down the track.

Issues can arise when:

  • One person is contributing more
  • One person is spending more 
  • One person is making withdrawals without the other’s consent
  • One person is doing more of the admin work
  • There’s no privacy around what each other spends.

Additional factors to consider:

  • Your responsibilities - If your partner defaults on their repayments, you may be liable for the amount owing, including fees, interest and charges, even if your relationship ends.
  • The consequences - Lack of payment will affect both of your credit ratings, which could impact your future borrowing plans and stay on your record for years to come.
  • Ignorance isn’t an excuse - If you sign papers you don’t read or understand you’re no less liable for any loans or guarantees you may have signed off on.

How can I protect myself?

Whether you’re living together, married or have kids, you may want to think about entering into a binding financial agreement (also known as a prenup)—if you’re worried about who might get what if you split up.

It’s not a nice thing to think about, but financial stress is a key negative influence on a relationship, with disagreements about money a major cause of divorce in Australia.2

With that in mind, if you do decide to combine your finances, there are no hard and fast rules. You can still maintain some personal freedom if it suits.

Like most things, there’s not a universally superior approach to managing finances with your other half. It will come down to what works best for both of you.

For more information

  • If you want to engage a professional, speak to your adviser and if you don't have one, we can help you find one nearby.

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© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.