Getting married isn’t just about merging two lives — it’s also about merging two individuals’ financial worlds. How a couple approaches their monetary union can have serious consequences. Some couples may find that combining funds can strengthen the relationship (as well as their combined net worth), while others want to maintain separate finances because of differing spending habits and goals, or to maintain a sense of independence.
There really is no one approach that will work for all couples, but understanding the options, benefits, and drawbacks can help you and your partner make the decision that will best work for your relationship.
Key Points
- Combining finances as a couple can simplify money management and provide tax benefits.
- There are multiple approaches to combining finances, including full merging of money, partial merging, or fully separate finances — each with its own pros and cons.
- The key to choosing the best strategy depends on your communication style, long-term financial goals, and each person’s financial health.
Should You Combine Finances After Marriage?
There’s no doubt that combining finances during marriage can make day-to-day money management easier. Having shared bank accounts, registered savings vehicles, and investments can simplify budgeting, ensure financial transparency, and cultivate trust. It can also help facilitate setting and working towards common savings goals, like buying a home, paying down debt, or saving for retirement.
That said, merging finances can be more of a challenge if one person has a higher income and feels that their partner spends too freely, while they are more frugal. Likewise, if someone comes into a relationship with a large debt, it can build resentment if both are expected to pay off the debt equally.
Even something as simple as different spending habits can undermine trust, such as one person being a spender while the other prioritizes saving, can lead to major conflicts if spending styles are not addressed before marriage. Combined finances can also be very difficult to untangle and cause added stress and acrimony during a divorce.
| Should You Merge Your Finances After Marriage? Ultimately, the right approach depends on comfort levels, spending styles and long-term goals. While some couples feel comfortable completely merging or separating their finances, other couples may take a hybrid approach that allows them to partially merge finance while preserving some autonomy. Learn more: After The I Do’s: Merging Your Money |
Full Merge of Finances
In a full merging of finances, all the income from both partners goes into shared accounts and all expenses, savings, registered accounts, and investments are managed jointly. Both partners also have equal access and full visibility into the finances.
Pros
Benefits of fully merging finances are as follows:
- Simplified Money Management: Fully merged finances simplifies money management with one shared system of access, spending, and saving.
- Builds Trust & Transparency: Each person will be able to see how the other spends and saves and can ensure goals continue to be mutually aligned.
- Unified Financial Goals: This may be the most efficient way to handle big savings projects and joint budgeting goals. It also encourages teamwork in setting savings goals, budgeting and spending.
Cons
A handful of potential risks to fully merging finances should be considered:
- Potential For Conflict: Different spending priorities and savings goals may conflict and cause tension.
- Imbalance In Responsibilities: This may put one partner’s credit at risk if the other partner has large debts that they are slow to repay.
- Risk In Separation: It may be difficult to divide assets if the relationship ends.
It’s wise to consider financial prenups or cohabitation agreements if you fully combine accounts. These legally binding agreements will clearly set out terms for things like asset division, debt payments and more if the relationship ends. They can help reduce anger, frustration, and confusion and give clarity during what is a very difficult and emotional time.
Partial Merge Of Finances
A partial merge provides a good balance of independence and teamwork. Each partner keeps their own personal accounts, but shares a joint account for shared expenses like rent, groceries, utilities, vacations, and other large financial goals, like building up a down payment for a home. Contributions can be equal for both parties or proportional to income.
Pros
Consider the following perks of partial merging of finances:
- Balance Of Independence & Unity: Each spouse can preserve their own sense of independence.
- Flexibility For Different Income Levels: Partial merging of finances can provide a sense of fairness if incomes differ wildly and one person has more debt or is more of a spender.
- Simplified Shared Budgeting: It may be simpler to manage for shared expenses while offering some privacy and independence with other spending.
Cons
Partial merging may come with these risks:
- Complex Monitoring Of Each One’s Finances: Couples may find it a burden to track who owes what and ensure each member is contributing to shared expenses fairly.
- Less Transparency: Disagreements may arise over what counts as a “shared” expense versus a personal one.
- Tensions May Rise: Conflicts could arise if one person often fails to meet their obligations.
Completely Separate Finances
Another less common option is for both partners to keep their finances totally separate and just divide each bill and expense clearly with a pre-determined arrangement (eg. straightforward half-and-half or a set percentage based on income). This approach is best for couples with a strong preference for privacy, independence, or complex financial situations.
Pros
Having entirely separate finances comes with several benefits:
- Financial Independence: Each partner maintains control over their own money, spending, and saving habits.
- Reduced Conflict: There may be fewer arguments over purchases, debt, or financial priorities since each person is responsible for their own money.
- Clear Accountability: It’s easier to see who’s contributing what and to avoid resentment over unequal spending.
Cons
Separating your finances completely may have some downsides:
- Lack Of Transparency: Without shared accounts, it may be harder to understand each other’s financial situation or long-term goals.
- Complicated Shared Expenses: Splitting bills, vacations, or child-related costs can become more complicated.
- Unequal Dynamics: If one partner earns much more than the other, separate finances could create imbalance or issues with lifestyle choices.
How To Combine Finances After Marriage
If you and your partner decide on doing some level of financial sharing, here are some tips on making the process smooth and fair:
- Establish Financial Goals Together: Set short- and long-term objectives (e.g., house, retirement, children) as a team and update together as needed.
- Create A Joint Budget: Decide how you’ll pay for shared and individual expenses, and set payment priorities.
- Open Joint Accounts: Have shared chequing/savings for joint expenses. Or, use a joint credit card and discuss how much each person contributes.
- Discuss & Manage Investments Together: Discuss what you’ll contribute to TFSA/RRSP savings vehicles.
- Set Financial Boundaries: If you prioritize different discretionary spending, consider setting some “no-questions-asked” limits to reduce conflict.
What Are The Financial Benefits Of Marriage Or Common-Law Partnership In Canada?
Merging finances in marriage or in a common-law relationship is not just convenient — it can also provide a host of financial benefits.
- Increased Eligibility For Tax Credits: If one partner earns below a certain threshold, the higher-income partner may claim a spousal tax credit. Other tax benefits include pension income splitting and the Canada Workers Benefit (couples can combine income to qualify). They can also combine charitable donations and medical expenses to qualify for larger deductions.
- Combined Incomes For Tax Purposes: This provides an opportunity for one spouse to transfer unused tax credits to the other.
- Reduced Tax Obligations: Married couples can file taxes jointly, which may result in lower overall tax obligations.
- Combined Benefits & Pensions: Married couples can enjoy the following:
- Canada Child Benefit (CCB): This benefit provides financial support for families with children, and eligibility can be based on a couple’s combined income.
- Canada Pension Plan (CPP): Spouses may qualify for survivor benefits if one spouse passes away. Pension income splitting also enables a person to transfer part of their CPP income to a spouse or common-law partner, lowering their tax bracket.
- Old Age Security (OAS): While OAS is paid to individuals, couples can benefit collectively because certain OAS-related benefits—like the Guaranteed Income Supplement (GIS)—are determined by combined household income. This means that if only one partner receives little or no other income, the couple could qualify for a supplement.
Learn more: How Living Common-Law Affects Your Finances
Other Cost-Saving Opportunities Aside From Government Benefits
In addition to the financial perks mentioned above, couples may enjoy other perks to keep more money in their pockets aside from what the government may provide:
| Shared Living Expenses | Splitting the cost of essentials like housing, food, transportation and utility bills can result in a huge boost to a couple’s disposable income, making it easier to put savings aside for retirement, buying a house and an emergency fund. |
| Health Care Coverage | Being part of a marriage or common-law relationship can entitle you to coverage by your partner’s work health insurance plan, giving you health insurance, extended benefits (like physiotherapy and massage therapy), and dental care coverage. |
Do You Have To File Taxes As A Common-Law Couple In Canada?
Yes. If you’ve lived together for 12 consecutive months or share a child for common-law couples, you must file your taxes as common-law (unless you’ve been separated for at least 90 days).
Dealing With Debt in a Marriage
Dealing with debt in a marriage can be challenging. Nobody likes to admit to someone they love that they are drowning in debt and have bad credit, but honesty is crucial for a strong relationship and for building a solid financial foundation that will last long term.
It’s key to assess each partner’s individual debt and credit rating before combining finances. This is not just for the sake of honesty and transparency, but to protect the credit standing of the debt-free partner (which best serves the couple as a whole). If the partner without debt retains their creditworthiness, it will benefit both parties if they want to apply for loans or a mortgage.
Being honest about what you owe also means that you can work as a team to set up strategies for managing debt together. This may include consolidating debt, creating repayment plans, and possibly even getting written legal agreements that clearly delineate individual assets and financial responsibilities.
Learn more: Dealing With Debt In A Marriage
Does Marriage Affect Your Credit?
Getting married does not affect your credit rating. Each partner retains their own score. However, when you apply jointly for a loan or mortgage, one partner’s bad score will likely negatively impact a couple’s chances of success, as well as prevent you from getting the best rates and terms.
How Does Buying A House As A Common-Law Couple Work In Canada?
Laws concerning common-law couples property ownership rights in Canada vary by province or territory. In general, you can purchase property as joint tenants (have equal ownership of a property with right of survivorship) or be tenants-in-common (ownership shares are split by percentage).
Be sure you’re fully protected — unlike married couples, common-law couples are not automatically entitled to a division of the property. So, be clear about what type of tenancy you have when buying a property, or ensure both partners are named on the deed.
Final Thoughts
Whether or not you decide to combine finances as a couple depends on your goals, financial habits, and relationship dynamics. For some, total merging builds a stronger financial foundation, while for others, partial or separate finances create needed boundaries. The key is to go into a relationship fully aware of each person’s financial health and spending habits, and create a plan that works for both of you.
