How to Combine Finances with your Significant Other

Whether you are newly engaged (like I am!) living together or married, combining finances with a significant other can be a more efficient way of handling money, especially if you have large purchases in your near future (i.e. wedding, home, etc.). However, doing so can create headaches and arguments. Here are the steps for creating a single household finance system by combining accounts.

Difficulty: Moderately Challenging

Instructions

1. The first step is to discuss with your partner both of your debts and liabilities, dates of the month that each of these debts are paid (are they by written check, or automatic withdrawal?). Also discuss each person's monthly income after taxes, and how often the two of you are paid. Write all of this information down.

2. Next, discuss each of your strengths and weaknesses in terms of money. Perhaps one of you is better able to handle the household finances, or you would like a system where both partners are equally responsible for paying the bills. It is also best to discuss your savings goals, whether for an upcoming big ticket purchase (like a house/condo, deposit on a new apartment, vacation/travel, etc.), retirement, or other.

3. Now you can begin to physically combine your assets. Open a new bank account with a bank that is offering a monetary incentive for doing so (right now, Chase is running a promotion where you get $150 for a new checking account with a minimum deposit of $100, and Bank of America is offering $75 for a checking account). Do a google search for this and see what comes up. Make sure the bank that you choose is located near where you live or work, so that making deposits or going to speak with bankers is convenient.

4. Make time to meet up at this bank with both of your information (driver's license, social security card or other proof of I.D.). Open the account as a joint account with both of your names attached to it. Make sure to order two debit/checking cards for the account. In the meanwhile, keep both of your old checking accounts open for the next month.

5. Next, choose a place to have your savings account. I personally like ING Direct; it is an online savings account that you can link to your bank and directly transfer money either automatically or periodically, for no cost. The interest rate right now is 1.39% (but one year ago it was 5%!). If you wish to open one, and would like a $25 bonus for doing so, I can refer you (please leave a comment with your email address and first name and I will send a referral link to the first three people who do so). There are many other savings account available, both online and at actual banks.

6. Now, link both of your old checking accounts, plus the new savings account, to your new checking account. This will enable you to easily transfer money while you are waiting for your new automatic withdrawal bill payment and direct deposits to be set up on your new account.

7. Each of you will need to fill out a direct deposit form at your work place, unless you would rather deposit your check at the bank itself. Make sure to do this as quickly as possible as it could take up to one month to become effective.

8. Each of you need to then re-set up your automatic withdrawals for each of your bills into your new checking account. Try to do this after each of you have paid all of your bills for the month you are in so that there are no missed automatic withdrawals on your next payment.

9. Keep all accounts open for one month, and check back once every few days to make sure your bills are all being automatically withdrawn from the new account, and your paychecks are being automatically deposited. Once you have gone through a one month cycle of this, you can close your old accounts with confidence.

Tips & Warnings

• Combining finances can be a frustrating and tedious process; try to be sensitive to each other's feelings and needs when it comes to money.
• After a one month cycle of the bills being paid and money being deposited into your accounts, set up a new budget that you are both comfortable with that allocates a certain amount of money for bills, savings accounts, retirement accounts, and entertainment/fun/other expenditure that each of you can use as you want without judgement from the other.