🐧 How I combine finances with my partner

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Today, in 10 minutes or less, you’ll learn:

• 🌏️ Our strategy for blending finances across three countries
• 👫 Pros and cons of three popular financial models for couples
• 📊 Real-world examples of how different couples manage their money
• ✅ A readiness checklist to see if you're ready to merge money with your partner

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👫 How I Combine Finances With My Partner

Do you combine your finances with your partner?

I’m only 1.5 years into married life, but I have some opinions.

For many people, this is an anxiety-inducing topic.

But contrary to popular belief, it doesn’t have to be overwhelming.

Yes. I say this as an American with an Australian wife sitting in Mexico with financial accounts sprawled out across 3 countries. If I can do it, so can you.

In this newsletter, I share how my wife and I combine our finances, how other couples do it, and a readiness checklist.

I’ll start out by revealing our highly controversial approach to combining our finances:

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Our Approach

OK I lied. Unlike other parts of our lives, we employ a fairly standard approach. (Come on, we can’t be unique in everything we do.)

My wife and I use a Yours, Mine, Ours approach (more on this later):

• Joint checking for all fixed costs* - rent, utilities, groceries/food
• Joint savings for couple savings goals* - honeymoon, business
• Separate accounts for personal investments and worry-free spending

*Not legally joint accounts (they’re in my name) due to the complex treatment of Non-US spouses by US banks

How did we arrive here?

In my opinion, understanding the “why” is way more important than the “how.”

I’ve known couples that hurl plates and verbal insults at each other because of money. What I’ve learned: I don’t want money to be a thorn in our sides until we’re on our deathbeds.

That’s why my wife and I started discussing money early while we dated. Money philosophy, relationship with money, how our households growing up treated money, and how we wanted money to support our vision for our lives together.

These were crucial conversations.

Fortunately, it became clear that we didn’t have a massive chasm in between us. (Phew.) Our views on money generally jived together enough to move forward.

1-2 years before we got married, we opened up a DBS joint checking account in Singapore.

Later, we’d open up both joint checking and savings accounts—while still maintaining our individual savings, investments, and spending accounts.

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Why did we go with this approach?

Few reasons:

• Tackles essential expenses and savings goals as a team - Philosophically, we wanted “Ours” joint accounts for our fixed cost spending and savings goals that we were both contributing towards.
• Yet, gives us individual space for worry-free discretionary spending & investments - i.e. keeping separate personal accounts for spending on hobbies/friends and maintaining our existing investment accounts.
• Flexibility and adapts based on our needs - We can dial up/down our contribution to our joint account based on our fixed costs and savings goals, while allocating the rest to our individual accounts (I’ll share example calculations later).

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How did we implement our approach?

As mentioned earlier, we opened up 1 joint account in Singapore. However, after we got married, we moved out of Singapore. This is where things got a bit more complicated.

We wanted to open up joint savings accounts for various short-term goals:

• Honeymoon: We had just received some monetary gifts from family for our wedding.
• Business: We wanted to allocate some funds for startup costs for businesses we wanted to do together.

However, it made no sense to attempt this with our Singapore account since we were now getting paid primarily USD.

At the same time, my US bank accounts required a SSN/ITIN for my Australian spouse to be added as a joint account owner. So we were stuck for a good 12 months.

Then, Mercury Personal came to the rescue.

While there’s a $240/year fee, it comes with user management capabilities that enable me to invite any user to join my designated accounts.

This enabled me to add my wife to a pseudo-”joint” account (technically under my name) and even create a debit card tied to the account with her name on it.

Here’s how we decided to divvy up the booty between our joint vs personal accounts:

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Steps:

1. Calculate your combined household income (for example, let’s say $300k)
2. Determine your proportional income contribution (Person A contributes 60%, Person B contributes 40%)
3. Calculate your combined fixed costs + savings goals ($10k/mo)
4. Calculate your proportional fixed cost contribution (Person A contributes $6,000/mo, Person B contributes $4,000/mo)
5. Each person sets up an automation for transferring the amount in (4) from your individual account to your joint account every month
6. Setup automated transfers from your joint checking to joint savings goals accounts

Voila! That sums it up for how we’ve combined our treasure chests.

We haven’t fully automated our setup yet, but plan to do so eventually.

Of course, we are just one couple. I scoured the interwebs for case studies and uncovered these data points:

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How Other Couples Combine Their Moneys

In one study done by Zeta, a couple’s fintech app, their team asked their users how they combined their finances:

• 32% Completely together - Merge their finances fully
• 37% Yours, Mine, Ours - Keep some together & some apart
• 31% Keep it separate - Trade off paying for expenses

I was most surprised by the 30%+ of couples who chose to keep their finances completely separate in this dataset.

Here’s one more data set that I found from my favorite ultra-reliable source, Reddit:

Roughly ~50% completely share finances, ~40% partly share, and ~10% complete separate.

These percentages line up more with what I expected… based on my own conversations with couples.

Now you might be wondering, what the h*ll do these terms actually mean?

Let me get into it:

Model 1: Completely Together

100% of couple’s assets and liabilities are together. E.g. only joint bank accounts with both people’s names.

Pros

• Easier to manage
• Full transparency

Cons

• Messy in event of breakup/divorce
• Requires being 100% on the same page on money

Model 2: Yours, Mine, Ours

Couples have a part of their assets and liabilities together in joint accounts, while putting the rest in individual accounts.

Pros

• Allows for independence, while paying for shared expenses
• Feels less judgement on purchases coming out of personal account
• Still easy to manage

Cons

• Can feel like there’s still more “yours” and mine” vs “ours”
• Can give rise to more mistrust on how money is being managed

Model 3: Completely Separate

100% of couple’s assets and liabilities are in separate, individual accounts.

Pros

• Full autonomy over your own finances

Cons

• Hard to maintain, especially with shared expenses like kids

Alrighty. Now that we’ve covered the 3 models, let’s talk about the 3 Questions to Ask Before You Combine Finances:

Readiness Checklist

Money With Katie shared these 3 questions, which I liked:

1. Do you want the same things in life? E.g. If 1 person decides to become an entrepreneur and make no income at 30, while the other wants to be a full-time doctor until 65, it’s good to talk about this upfront.
2. Do you have the same approach to money? Super important. Is one person more frugal than the other? How do you feel about spending on luxury?
3. Is one person coming in with significantly more wealth or debt? How do you feel about that? Will the person more wealthy be comfortable with helping pay off the other person’s debt or nah?

Your answers will heavily influence what model may suit you.

For example, if you & your partner want the same things in life, have a similar approach to money, and have relatively similar levels of wealth…

… then you might feel a lot more comfortable with combining 100% of your finances.

However, let’s say you love spending on luxury, plan to become an entrepreneur, and have $200k of graduate school debt. And your partner is ultra frugal, wants to work as a software engineer until 65, and has no debt.

You’ll definitely have some discussing to do before combining accounts.

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In Summary

• We opted for a “Yours, Mine, Ours” approach
• We use shared accounts for fixed expenses & savings, while allowing for individual flexibility
• Mercury Personal simplifies setting up multi-user accounts
• 32% of couples fully combine finances, 37% use a mixed approach, 31% keep separate
• Use a Readiness Checklist: considering life goals, money approach, and any big disparities

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🏡 What do you do about your house/condo if you want to live abroad for most of the year? (link)

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