Married with money: How to combine finances with your partner

by Ann deBruyn

A man and woman on a beach hold cushions saying Mr. Right and Mrs. Always Right

Photo by Anastasiya Lobanovskaya from Pexels

If you’re in a relationship, the topic of money will eventually come up. Since the pandemic started, couples have spent more time talking about money, according to a 2021 RBC poll. Almost half—47%—identified finances as one of the biggest stressors in their relationship. One U.S. study found that disagreements over money were a leading predictor of divorce.

Whether you’re planning to cohabitate or you’re already living together and are starting to plan financial goals, here are some tips on bringing your money together.

Talk about money with your partner early

Whether you’re married or not, it’s important to understand your partner’s financial situation, goals and values. Feelings about money formed during childhood often influence us as adults—for instance, fear of not having enough, discomfort with debt, or family taboos around talking about money. Even without these money hang-ups, everyday spending and saving can be stressful when you’re combining finances with another person.

If you and your partner are moving in together, discuss how you’ll split household costs. Will regular expenses like rent or mortgage payments, utilities, home insurance, groceries and internet be shared equally or in proportion to your respective income levels? If either of you has children, will you share daycare and other child-rearing costs?

Once you’ve covered everyday expenses and how to track them, consider how you’ll deal with the unexpected. Will you both contribute to an emergency fund? What about big-ticket surprises like a broken appliance or leaky roof? How will you handle it if one person wants the cheapest solution while the other prefers paying more for quality or prestige?

Then discuss how much to budget for discretionary items like restaurant meals, vacations, recreation and entertainment. Is everything shared, or does each partner get to spend their own “fun money” after financial obligations are covered?

Every couple is different, but for these and other money matters, clear, open and honest communication is vital to avoid conflicts and resentment down the road. Don’t wait until you face major events like buying a home or dealing with one partner’s sudden unemployment to start discussing your finances openly.

Sharing your life—and your debt

Legally, each person remains responsible for their own bank accounts, loans and credit card debt. But if you’re planning a life together, reducing your combined debt creates a stronger financial foundation. Helping your partner pay their debt will also improve their credit score, which may benefit you both in the future, when you need to finance major purchases like a home. Talk about how you’ll manage debt together. Will you help each other pay off existing obligations like credit card balances or student loans?

If you choose to keep debts separate, be aware that if your partner is behind on loan payments, the lender may seek permission to make a claim on jointly held assets—including your home.

Marrying someone with a bad credit score does not affect your own score. You only become responsible for your partner’s debts if you co-sign loans or share credit card accounts. If you open joint accounts or take on debt together, the history of these accounts will be reflected in both credit histories.

When applying for loans and credit cards, you don’t have to apply together. Married or not, each person can still open individual accounts without the other partner’s participation. Maintaining individual accounts is a good practice for building a strong personal credit history. And if you have a low credit score or a past bankruptcy, borrowing may be easier if your partner applies on their own.

Consider the pros and cons of sharing credit cards

Sharing a credit card can be convenient for joint expenses. If you apply for a credit card jointly with your partner, you’re both responsible for money owed. If you add your partner as an authorized user or a secondary cardholder to your existing account, however, you’re the one responsible for making payments. In addition, some credit score companies will attribute the credit history for the account only to you, the main cardholder.

Keeping separate cards can help each partner build a credit history. If you decide to share credit cards, discuss who will pay the bills on time, to avoid unnecessary interest charges.

Contribute to spousal RRSPs or your partner’s TFSA

Spousal RRSPs let you share your contribution room with your spouse or common-law partner, as defined by the Canada Revenue Agency (CRA). Instead of putting 100% of your annual RRSP contribution into your own account, you can split it between yourself and your partner.

Income splitting is a popular retirement planning strategy for couples, allowing one partner to take advantage of the other’s unused contribution room. By contributing to a spousal RRSP, the higher-income earner helps equalize their own post-retirement income with that of their lower-earning partner. Ideally, this moves the higher-income earner into a lower tax bracket, reducing the couple’s combined income taxes.

What about tax-free savings accounts (TFSAs)? Although you can’t contribute directly to your partner’s TFSA, you can give them money to make a contribution.

Setting up automatic transfers from your bank account can help you take full advantage of the contribution room in tax-advantaged accounts. Products like EQ Bank’s high-interest RSP Savings Account and TFSA Savings Account have attractive interest rates to help grow your savings faster, and they have no monthly fees. If you plan to invest the money but haven’t decided how, you can earn interest while you think about it.

Save time and money with joint accounts

Many couples use joint accounts for savings and expenses. Each partner can contribute or withdraw money from the account independently. This is convenient for paying shared expenses like monthly utility bills.

Before you open a joint account, discuss how much you’ll each contribute and how the money will be spent. Again, good communication is essential—you want to avoid overdrafts.

Shop around for the most attractive offer. EQ Bank’s Joint Savings Plus Account, for example, gives you chequing and savings in a single account, with one of the best interest rates around. There’s no minimum balance or monthly fee, and account holders get unlimited free electronic fund transfers and bill payments. Joint Savings Plus Accounts are eligible for Canada Deposit Insurance Corporation (CDIC) coverage and protected by EQ Bank’s multi-layer security and fraud monitoring.

Combining finances is a major step for you and your partner, so take time to talk it through. By working together, you can take advantage of financial planning strategies and achieve your goals.

Read more about personal finance:

  • How to talk to your partner about money
  • How financial advisors can help at different life stages
  • An easy guide to income-splitting for seniors