To Merge or Not to Merge? 3 Ways to Approach your Finances in a Relationship

Is merging your finances or keeping them separate the best decision for you as a couple?

Most Valentine’s Day cards contain expressions of affection like “be mine,” or “forever yours,” over something as domestic as “want to get a joint bank account and split a mortgage?”

But while discussing money matters (like whether or not to merge finances) with your significant other doesn't exactly make for romantic dinner conversation, agreeing on how to handle your money is important for any long-term relationship. And while many couples do wind up sharing financial commitments and products – like a bank account or a mortgage – the reality is that sharing finances isn't going to work for everyone.

"It's important to talk about money early as a couple, before taking any major financial steps you need to evaluate your relationship and priorities," said Rina DeGrazia, Vice President, Financial Education at TD Bank.

Whether you decide to keep your finances separate, pool them together or do a bit of both, here's a closer look at the three common approaches to managing finances when in a relationship.

Separating finances

Also known as: The 'what's mine is mine and what's yours is yours' approach.

How it could work: Couples choose to keep separate bank accounts and each partner contributes to paying specific bills and other household expenses, individually.

Things to consider: DeGrazia says couples may choose to keep separate accounts for reasons that include convenience, independence and having funds available for individual needs such as personal spending and emergencies. You may also want this approach to maintain some privacy to be able to purchase something for your partner as a surprise, for example.

"By keeping your money separate, you maintain full autonomy over your finances," she said.

For others, choosing the separate approach is ideal in situations where one partner has spending habits that drastically differ from their own, or in cases where one partner earns significantly more than the other and has agreed to contribute a greater share of covering household expenses and bills.

Sharing finances

Also known as: The 'what's mine is yours' or 'all or nothing' approach.

How it could work: Couples choose to merge their finances, pooling their money into one joint bank account which they use to pay all expenses, including household bills and personal spending.

Things to consider: Whether you’re a big spender or somewhat more frugal with your money, pooling your finances when you’re in a relationship means everything is out in the open.

"Having communal funds creates transparency as every expense and purchase drawn from that account can be seen clearly by you and your partner," said DeGrazia.

While many couples who choose this approach may do so because it makes them feel more committed to the relationship, setting some ground rules—including an appropriate spending budget for each partner— can be helpful in avoiding conflict and sticking to a savings plan or budget.

Sharing & separating finances

Also known as: A 'mix of both' approach.

How it could work: Couples choose to pool a certain total dollar amount in a joint account for shared household expenses (rent or mortgage, utilities, groceries, etc.) while also each keeping a separate account for personal use.

Things to consider: Choosing to open a joint account for shared expenses while still maintaining a separate account for personal spending can sometimes let people feel like they have the "best of both worlds," in terms of privacy, accountability and control, said DeGrazia.

Examples of shared accounts can include having a joint checking and/or savings accounts, as well as a special savings account for emergency use.

DeGrazia advises that while couples may tackle items such as household expenses or debt together, maintaining financial independence through a separate, individual account can could also be beneficial should the relationship end.

Which option is best?

Because there is no "one-size-fits-all option," DeGrazia adds that first talking to a financial advisor or planner could help you and a partner determine which approach will work best for your needs.

"Once you've settled on a method it's also important to make an appointment to review your choice. Talking about it regularly makes it easier to make changes if something isn't working out to better create a situation that’s effective for you."