Personal Small Business Corporate & Institutional About Us
The number of adults aged 25 to 34 living with a partner has more than doubled from 20 years ago, according to census data,  with an estimated 17 percent of women and 15 percent of men now opting to live together before marriage. And that often means that more couples are considering whether or not to co-mingle budgets and bills.
When it comes to couples and finances, deciding which route to take depends on your circumstances. Income, age, assets and debts can, and often do, change during the course of a relationship.
PNC Investment’s Cary Guffey offers a few strategies to help you make the best choice, based on your financial situation.
There are certain situations where it makes sense to keep finances separate. One partner may have acquired excessive debt or accumulated significant assets before the relationship. Or perhaps a remarriage will affect a previous widow/widower’s pension benefits or an inheritance for a partner’s children.
“In the case of second marriages or later-in-life marriages, especially those where each partner may have children, it may be easier to keep finances separate to avoid multi-generational relationships being strained,” Guffey says.
On the other end of the spectrum, fictional young newlyweds Jane and Jack are looking to set up a new household, but one has poor credit. For this couple, there may be an advantage to keeping finances separate, especially if there are lending needs, since the partner with the higher credit score may qualify for better interest rates.
Keeping separate accounts also makes sense if one partner is irresponsible with money and isn’t willing to take on more financial responsibility over time.
“The downside to keeping finances separate is that if you’re applying for a loan, you lose the ability to include the other person’s income, which could affect your debt-to-income ratio,” adds Guffey. “So yes, you avoid the bad credit, but you’re standing on the loan by yourself, and that ultimately could reduce your borrowing capacity.”
For couples with similar incomes or net worth, a separate but equal approach might work best. One later-in-life couple, in a second marriage, kept their finances separate, and alternated paying household expenses each month, Guffey recounts.
“He would pay all the bills in January, she would pay all the bills in February and it worked for them, in part, because there was no disparity between his assets and hers,” Guffey says. “Although, he did joke that any time it was his turn to pay, she’d want to go out, but when it was her turn to pay, she’d say, ‘go pick a tomato off the plant out there, and let’s have a tomato sandwich.’”
One of the advantages to combining finances is that it’s generally easier to keep track of your money. “Instead of keeping up with multiple accounts, you might be better served by combining those accounts,” says Guffey. “In some cases, you may have larger account balances once combined, so you could potentially reduce or even avoid fees.”
If you choose to merge your money, you have a few options to consider.
You could consider the proportional method, in which you share expenses based on the percentage of each person’s income contribution. Say one partner earns 60 percent of total household income and the other earns 40 percent. The higher-earning partner could cover 60 percent of shared expenses, while the other covers the remaining 40 percent.
An advantage to this method is that it helps balance joint expenses and also allows each person to keep separate money for themselves.
Another contribution strategy to consider, which is a slight variation of the proportional method, works best when one partner earns significantly more than the other. The person who earns the most contributes exclusively to the couple’s expense and retirement accounts, and the second income funds a joint savings or spending account.
“In this situation, the higher earner’s income covers the daily expenses, while the lower-earning person’s income makes up the ‘mad money’ account for vacations, the emergency fund or gifts for the grandkids,” adds Guffey. “But this strategy only works if you both know the bills and obligations you’re using these different accounts for, and you both agree on how to tackle this together.”
“No matter what approach you take, it always comes back to communication -- sitting down at the kitchen table, laying it all out there and strategically deciding the best way to approach the situation,” says Guffey. “The more you communicate, the better you understand that everyone has different spending priorities. It doesn’t mean you have to agree on what you each want to spend, but it does mean you need to agree on the rules of engagement,’” says Guffey.
Learn more about ways to share, spend and save together »
PNC Point of View
Real People. Real Perspective. Real Insights.
Read more POV Stories »
These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.
This site may provide reference to Internet sites as a convenience to our readers. While PNC endeavors to provide resources that are reputable and safe, we cannot be held responsible for the information, products or services obtained on such sites and will not be liable for any damages arising from your access to such sites. The content, accuracy, opinions expressed and links provided by these resources are not investigated, verified, monitored or endorsed by PNC.
Important Investor Information: Brokerage and insurance products are:
Not FDIC Insured • Not Bank Guaranteed • Not A Deposit
Not Insured By Any Federal Government Agency • May Lose Value
Securities products, brokerage services and managed account advisory services are offered by PNC Investments LLC, a registered broker-dealer and a registered investment adviser and member FINRA, and SIPC. Annuities and other insurance products are offered through PNC Insurance Services, LLC, a licensed insurance agency.
Read a summary of privacy rights for California residents which outlines the types of information we collect, and how and why we use that information.
We have tools to help you bank when and where you want.Mobile Apps Directory »
Be part of our inclusive culture that strives for excellence and rewards talent.Visit PNC Careers »
The PNC Financial Services Group, Inc. All rights reserved.