When Pooling Finances in a Relationship Can Be a Bad Idea
There are many reasons to combine finances in a relationship. However, depending on your situation, sharing everything can make life difficult for both of you.
As personal finance site Money Ning explains, in some situations, splitting your finances has more than just consequences if you split up. It can hurt you even when you are together. For example, your credit score is calculated independently. Your partner’s debt acceptance can negatively affect your debt-to-income ratio or your loan utilization rate if there are significant differences between you and your partner’s debt:
Van Cleve warns against a debt loan with his wife. He points out that in most states, your credit is separate from your partner’s. Cosigning “affects the ratio of your debt to income on future loans, and if payments are not made by the borrower, your credit rating will suffer as well.” Not only that, Van Cleave warns, things can change over time, and you don’t want to be hooked on your partner’s debt after the relationship is over.
Fortunately, bundling your finances is not an all-or-nothing task. When thinking about how to handle money in a relationship, consider each option individually. Of course, it’s also important to be mindful of what might happen if you drift apart and take your time with decisions . But even if you decide that combining is a good idea, see how each choice affects both of you.
Love and money: do you really need to share everything? | Ning’s money