When you and your partner decide to move in together, you need to work out whether it would be better to share your finances, or to continue to operate separately.
We consider the benefits of sharing finances, and we find out when it may be best to keep your money separate.
Tip: Keen to get your debt in order before pooling funds and expenses? Debt consolidation can help.
The benefits of sharing your finances
Sheila-Ann Robey, financial adviser at Lifeguards, an affiliate of Liberty, points out the benefits of cohabiting partners sharing their finances.
“Not only is a combined budget an opportunity to maximise your joint income and expense split, but the exercise of doing so is an opportunity to work together as a team. This can ensure the financial success of your home,” says Robey.
By avoiding duplication of expenditure, surplus income will be available for other financial goals - provided that your finances are planned adequately.
“If you decide to share your finances with your partner, open communication is crucial to success. With the help of a financial adviser, the process can be seamless,” says Robey.
Farzana Botha, segment solutions manager at Sanlam Savings, says that sharing finances also helps cohabitants to identify and establish financial compatibility.
“This is a very important aspect of a relationship and it contributes to its longevity, as well as the ability of the couple to establish and achieve working goals together,” says Botha.
She outlines the following further benefits.
- You will understand each other’s financial position, liabilities, goals, and budgets.
- You can encourage each other to be accountable for your personal financial goals.
- You can set and aspire to realistic and achievable financial goals together.
- Two are better than one. Sharing knowledge or experience around finances will help you and your partner to progress more quickly and feel a sense of accomplishment when you’re able to service and eliminate debts, save money together, and achieve significant goals.
“By sharing your finances, you and your partner will be able to have a realistic picture of the state of your collective finances, and you will be able to plan the way forward from there,” says Botha.
When to keep your finances separate
Robey says that sharing your finances with your partner requires good teamwork, communication, and a commitment to proper budgeting and administration.
“If any of these factors are missing for whatever reason, or the individuals don’t feel confident that they can successfully share their finances, I would advise against it,” says Robey.
In particular, if your relationship is new, and you and your partner are still getting to know each another, embarking on shared finances may put your relationship at risk.
“On top of this, if one partner is struggling financially, shared finances may put the relationship under pressure due to an imbalance of income and expenditure,” says Robey.
Botha says that money can be a sensitive issue if one partner earns more than the other. There is also an element of shame and embarrassment when people have to disclose their debt or financial losses.
“There’s nothing wrong with managing your finances separately. However, it’s still important to speak about it and openly disclose as much as possible,” says Botha.
Make your remaining debt more manageable with debt consolidation – get started today.