How to Collaborate on Finances as a Millennial Couple

By John Rampton

In the past, sharing finances was straightforward. Two people got married (usually young) and combined their money into a joint bank account. It’s always been easy to collaborate on finances.

Millennial couples are different. They move in together sooner and marry later. They also carry record levels of student debt and typically earn dual incomes. So by the time they get married, both partners are used to managing money on their own and have different spending and saving habits. As a result, about two-thirds of Millennial couples keep their finances partially or completely separate. Only 34% of Millennial couples completely combine finances, compared to 51% of couples overall.

Money has long been the leading cause of divorce, but the shifting trends with Millennial couples only makes it harder for them to collaborate on money. The vast majority of Millennial couples (88%) say that finances are a source of tension in their relationship. Over a quarter fight about money weekly and over half fight about it monthly.

When it comes to managing shared finances, Millennial couples have several options: combine everything, keep everything separate, or combine some but not all.

Option 1 – Combine everything

About 34% of Millennial couples combine everything. My wife and I (a Millennial couple) went this route when we moved in together about six years ago – three years before we got married. We chose to merge everything because it’s how our parents did things and, frankly, neither of us cared that much. We had student loans and not many assets, so why not? This approach has its perks, but it’s far from perfect.

Fairly simple, but a big step

Combining everything tends to be the easiest system to set up. Both partners move their money into a joint checking account and pay for everything from that account. No need to figure out how to split all of the bills or decide which account to use for which purchase.

Having all of your money in one place makes it easier to quickly understand your financial situation, and eliminates the need to track spending and balances across many accounts. And, if something happens to your partner, you don’t have to worry about being able to access your funds.

However, a joint account is a big step – especially if you and your partner are not married yet. You’re both on the hook for mistakes with the account (e.g., overdrafts), and if someone sues your partner, they may be able to go after the money in the joint account.

More transparent, but maybe TMI

Merging all of your finances promotes transparency in spending, since you and your partner have access to each other’s transactions. That can lead to greater accountability and smarter decisions. For example, combining accounts with my wife definitely curbed my impulse-buys on Amazon, since I knew she could now see the $50 pour-over coffee maker I bought for those occasions when Mr. Coffee just doesn’t cut it.

But allowing your partner to see every one of your transactions can feel like an invasion of privacy. Go to the full article.

Source:: Business 2 Community

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