Finance Your Budget When two become one: How to merge your finances

When two become one: How to merge your finances

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Valentine’s Day has long been one of the most popular days to pop the question – but in many ways, that’s the easy part. For a lot of loved-up couples, the biggest issue is how to organise their money together.

That makes opening a joint account one sure-fire way to show commitment.

Don’t just take my word for it. Research carried out by online bank ING Direct found getting engaged or married was the most common reason to open a joint account (31 per cent); followed by “a shared savings goal” like a holiday or buying a home (at 23 per cent); and moving in together (18 per cent).

In addition, the research indicated shared finances were a particularly important show of commitment when it came to the blokes. Of the 1000 respondents, twice as many men than women cited “being in love” as a reason to open a joint bank account. Men were also more likely to initiate the “joint account” conversation.

Secret stashes

The rosy tone of the study took a bit of a dive from there, though. Aside from the obvious benefits of having a joint account – such as helping with saving and budgeting – nearly 10 per cent of the people surveyed listed “having greater visibility of my partner’s financial activity” as a benefit.

And well they might. One in 10 men admitted they had a secret account for purchases that their partner might not be thrilled about. Likewise, seven per cent of women had a secret account – but they were more likely to use it for savings.

Most worrying, though, were the 10 per cent of respondents who said they couldn’t even bring themselves to raise the topic of finances with their partner.

Michelle Hutchison of, a bank interest rate and insurance comparison service, says money can be a touchy topic for couples.

“When discussing money goals with your partner, the key is to be honest and come to an agreement on what will work for both parties. There are so many options available, you don’t have to join all of your bank accounts to be better off,” she said.

“The most important thing is for couples to be honest with how they want to set up their finances to avoid money issues down the track.”

Talk is cheap

Michelle Tate-Lovery, principal financial adviser at Unified Financial Services, says it’s vital for couples to be able to talk openly about financial matters.

“Everyone needs to be actively involved with their finances and in control of their financial position – and if they are, there will be [fewer] issues in the relationship,” she said.

“Seriously, a lot of people don’t know what they owe or what they own.

“Each person will bring different experiences with money to the table and opening up about your finances may well highlight that one of you is a saver and the other is a spender. Having a common goal is very important, as it will help you strive towards a target together, while working out your financial commitments.

“Use Valentine’s Day to get this potential block out of the way early – and that means full disclosure. Think about professional help in the form of a financial planner.”

Tate-Lovery also suggests couples retain some level of financial independence, even after opening a joint bank account.

This extends to spouses who don’t earn a pay packet, because they have chosen to study or stay at home to care for children.

“We advise these clients to have a portfolio set aside so they can derive passive income while they’re on maternity leave,” she says.

“It’s so important for their healthy mindset.”

Accounting for differences has identified some simple options for couples to organise their money and avoid future conflict:

• Mutual joint savings account: This type of set-up is great for those who want to save money together, but don’t have a home loan and prefer to have separate transaction accounts.

• One central account: Both of your incomes go into the one account to pay all expenses. If it’s an offset account, both your incomes can be credited to reduce the interest bill for your home loan.

• Contributing accounts: This is where you both have separate transaction accounts, but your savings go into your home loan. Consider comparing home loans with free redraw.

• Separate accounts: This works best for couples who prefer to keep all of their money separate. You can still agree to share expenses – for instance, one pays the water bill and the other pays electricity. Or halve everything down the middle. Even savings are banked independently, so if you have a joint home loan a good option is to look at offset accounts that keep money separate.

Bernard Kellerman is an independent finance writer, bank-watcher and ex-accountant.

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