Key takeaways
- Over a quarter of millennial couples keep their finances separate.
- There are three good reasons to consider not separating finances as a couple.
- Carefully consider the pros of combining your money and its impact on your relationship.
Have you ever played straight poker? Each player gets five cards and if you get three of a kind, you’ve got a really good winning hand. That means something like three aces gives you a great winning hand. This poker game came to mind as I thought about the three most important Ts in couple relationships.
A recent study on millennials and money reported that 28% of couples under the age of 37 kept their respective finances separate. And that’s completely separate. Only about 10% of couples over age 37 separated their finances.
So what are the three Ts that are important to consider when it comes to deciding whether to separate your money? Here they are, and, as you will see, I’m suggesting you consider not separating your money based on these three Ts:
1. Taxes. This one is very practical. Believe it or not, if both parties in a couple work, filing separate tax returns is actually detrimental. You’ll pay more in total taxes by filing separately than by filing jointly.
I won’t get into the details of it here, but consider that one because the cost continues to rise as income rises.
2. Long-Term. Lots of couples, whether married or not, break up or divorce over money. It’s one of the top reasons people end up parting ways. It happens because either the couple just never discusses money, or there are misunderstandings about spending by one person that the other person thinks is wrong.
There are so many complex issues involved. I’m amazed at the things I’ve seen happen with couples around failure to communicate about money. It’s unfortunate for that to break up a long-term relationship.
3. Trust. This one is probably the most important. It’s a big step in trust to provide someone else with information about our personal finances. Trust works both ways, so when a couple offers access to this information to one another, it makes for a stronger relationship.
These three Ts—think about them and how they can fortify you as a couple. If you currently have your finances separated, and you want a stronger relationship plus possibly save some money on taxes, it’s an important consideration. It’s a winning straight poker hand for you and your partner—three of a kind. Until next time, enjoy.
Gary
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