Taking the next steps in a relationship can be exciting and sometimes scary, and, when it comes to combining your finances, this is a significant move that often needs approaching sensitively.  We’ve listed a few ways you and your partner can combine your finances and how to go about doing so.

There’s no right or wrong method, every couple is different and not all will have the same preferences, so it’s best to keep an open mind and adapt it to your individual relationship.

Steps to combining finances

Date night!

When it comes to planning how to combine finances, why not make it fun and romantic?

Prior to having the discussion, you could cook a lovely meal together or order your favourite takeaway, enjoy each other’s company, and talk through your day together. You could plan an activity before or after the discussion, like a trip to the cinema. This can be helpful, particularly if you are feeling anxious about ‘money-talk’, remember you’re talking with your partner and not a stranger.

It might be worth scheduling a ‘financial date night’ periodically, every fortnight or month. It’s healthy to create this habit and routine with your partner as your finances will affect each other in some way.

Get organised

Prior to the meeting, make sure you have all the documents required and your financial information. This will include salary, expenses, outstanding debts, subscription payments, current pension pot balance and credit card balances, amongst others. Both of you should have everything prepared for the discussion, either printed or ready to go on your tablet or laptop.

Honesty is key

Before you both get into the logistics and start talking numbers, have an open and honest conversation with each other. Identify why you would like to combine finances, talk about your financial goals and your future together.

Running through the benefits of combining your finances can be helpful, what are the reasons as a couple this is best for you?

• Shared financial responsibilities and goals
• Increasing flexibility and security to handle financial shock and hardships
• A strong sense of equality
• Making the payment of bills and budgeting more transparent
• If there are more savings in your account this means more interest earned

In the same vein if you feel nervous and have any worries towards combining your finances, now is the opportunity to think about your drawbacks:

• Are you concerned about your partner’s financial history?
• Do you find it difficult to trust others with your finances?
• Are you worried about taking on part of your partners debt and vice versa?

Choose your method

One size doesn’t fit all when it comes to money, combining your finances can look different to various couples. Take the time to discuss the approach you and your partner would like on merging your finances.

• Combine everything and splitting it – An option to take is taking all your earnings, any debt, bills, and subscription payments and create a budget with all your incomings and expenditures in mind. This approach is an ‘all in’ method. Everything is shared and transparent, and within your budget you can allocate individual disposable incomes so it’s fair and you both have freedom to spend this money however you wish.
• Combining only particular things – Figure out your monthly outgoings, such as household bills, groceries, rent or mortgage payments and subscriptions. The rest of your own earnings is separate and if you have any outstanding debt this will remain the individual’s responsibility.
• One payslip – Living off one payslip can mean multiple things. In some cases, couples may decide that one of them doesn’t work at all and is a stay home parent or partner. Another is if both partners earn a payslip, one payslip goes directly towards monthly expenses and the others is used wholly for savings – meaning you could reach your savings goal faster!
• It comes down to nothing – You may find after discussing the possibility of combining your money that you mutually decide to continue the relationship financially independent and are both happy to remain responsible for your own financial obligations.

Once you’ve decided how you’d both like to move forward with your finances, either together or individually the next step is to consider what do with your bank accounts and organise a trip to your local branch or set some time aside if it’s online to set any joint accounts, direct debits, standing order, etc up.

Important points to consider

• Financial Services Compensation Scheme – Whichever avenue you and your partner decide it’s worth noting and considering the financial services compensation scheme (FSCS). The Bank of England advises customer deposits held by banks, building societies and credit unions (including in Northern Ireland) in UK establishments that are authorised by the Prudential Regulation Authority (PRA) are protected by the FSCS up to £85,000. This includes deposits in current accounts, savings accounts, cash or savings bonds.

If you and your partner combine your finances into one account this means your entire funds are protected up to £170,000 of your total deposit. However, if you and your partner were to continue having separate banking accounts, you’re protected by £85,000 each. You could also consider holding your shared finances in more than one bank account to maximise financial protection. For more information on FSCS click here.

• Your spending becomes their spending – If you or your partner are spending too much and have joint finances this will now impact both of you. The communication lines must be clear for both of you, if one is hiding financial difficulties from the other, this can cause problems and shake the trust within your relationship.

Read our blog on financial infidelity here.

• Consider your credit score – If you are combining your finances with your partner and especially if you go all in, this can affect your credit rating. Be sure that you both check your credit score before committing to link your finances and think carefully if one of you happen to have a poor credit rating as this can impact your financial goals for e.g., buying a house. It might be worth waiting to combine your finances until both of you have an improved credit rating.