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Congratulations on getting married!
Starting a new chapter in life with the person you love is always a time filled with fun and excitement.
But you also have to face real life issues.
One of the first issues you will face is should you combine finances after marriage.
On the surface, it is an innocent question, but there are lots of gray areas you need to consider.
In this post, I walk you through everything you need to know about having joint finances, so you can decide if it makes sense for your financial situation.
Should You Combine Finances After Marriage
Financial Options After Getting Married
After you tie the knot, you need to start having more detailed talks about all things personal finance.
Most likely, up until now, you were keeping your finances separate.
But now that you are a couple, you might want to take the next step.
What the next step is for each couple is different.
At the end of the day, you have three choices when it comes to combining finances.
- Combine Finances. Here you combine everything, having joint accounts, and joint expenses.
- Keep Finances Separate. With this option, you keep your money separate and manage your own money, and allocate shared expenses.
- A Combination Of Both. A hybrid approach where you have a joint account or two, but also have separate accounts.
As mentioned, each couple will have a different answer, so no one answer is right or wrong.
Understand a successful marriage does not depend on you combining finances or keeping your accounts separate.
Let’s look at each option in more detail.
This option is the hardest at first, simply because you need to open up joint accounts, change direct deposit information, and set up new bill pay instructions.
But after that, it is mostly smooth sailing.
I say mostly because money management with your partner still requires work.
You will always have to be open and communicating to make sure you both know where you stand financially and that each person is on the same page.
Here are the pros and cons of combining finances to consider.
Pros Of Merging Finances
#1. Joint Money Goals
When you join your finances, it is easy to set up and walk the journey of reaching your money goals together.
You are able to see your total income and expenses and then develop the goals you want to achieve around this.
#2. Growth Of The Relationship
This is arguably the biggest reason to combine money.
When you are dating, it is fine for each person to be responsible for certain bills.
But when you are married, you are a team.
If you continue to keep your finances separate, you don’t strengthen this bond.
You can easily make it feel like you are simply still in the dating stage and not willing to grow up.
By sharing finances, the relationship grows stronger over time.
Take for example the case where one spouse works and the other stays at home.
While the stay at home spouse isn’t contributing financially, they are contributing in other ways.
For Financial Coach Theresa Bailey, this is something many people don’t think about.
“For couples with only one earner, combining can create a sense of security for the non-earner, making them feel part of the money process regardless of their status. This is a huge psychological gift so to speak and a great way to build trust in many circumstances.”
#3. Easier Access To Money
When you have a joint account, if one spouse passes away, you have access to the account since your name is one it.
If you have individual accounts, you have to do a lot work to prove to the financial institution that you are the spouse and that the account owner is deceased.
This involves showing a death certificate, a marriage license, and possibly more.
#4. Simplifies Things
It is much easier to pay bills when you combine your money.
For example, when you go out to eat, you don’t have to have a conversation on whose turn it is to pay.
You just pull out your wallet and make the payment.
It also helps that one partner doesn’t have to collect money from the other partner for any upcoming bills.
#5. More Transparency
Since all of your income and expenses are coming from the same accounts, you can’t hide your spending habits.
This can be a great way to help keep your spending in check.
It can also help you to make better financial decisions in the future because you can see how you save and spend money.
#6. Save Money
There are some areas where you might be able to save money when you join your finances.
For example, it will probably be cheaper to have the same cell phone plan as a second line is discounted.
Car insurance is another place where you can lower the amount you pay too.
In all, there are many ways you can lower your expenses when you combine your money.
Cons Of Merging Finances
#1. Loss Of Freedom
A big downside to managing money together is a loss of freedom.
As noted above, your partner will see all of the things you buy.
This lack of freedom with your money can be a big issue for some people.
It can also be hard to change your money habits that you have used your entire adult life.
While it is important to come together in marriage, it is also important to never lose sight of who you are as an individual.
Financial counselor Melissa Mittelstaedt highly recommends that “married couples create a threshold for how much one person can spend without bringing it to the family for discussion. For some couples it’s $50 and others it’s $500+, so knowing where that line is upfront will make married life a little simpler.”
This approach can provide some freedom when it comes to money.
Mittelstaedt also recommends that if married couples share finances that they should “consider the option of having personal accounts as well. This way you can create a spending plan/budget that includes some no strings attached money.
For example, every month $100 gets moved to each of your personal accounts and that money can be spent on whatever you’d like.
This way, neither of you are monitoring every dollar the other spends (and if you’re like me and love surprises, you can still receive a present without knowing where it’s from and how much it cost!).”
#2. Comprise On Your Spending
You also may need to compromise on your spending.
Maybe you enjoy playing golf on a regular basis, but because you have a joint goal of saving for a house, you have to cut back.
You also have to agree on the bank to use, what financial products to use, and more.
#3. Complicated If Marriage Fails
In the event of the marriage failing, the divorce process gets complicated.
With joint accounts, you have to now divide everything up and transfer the money.
The hardest part is the dividing of assets.
Coming to an agreement when in the heat of the divorce is a hard time for most people to compromise.
While it is easier if you don’t have kids, money is emotional and when you add on a failed relationship, things can get ugly.
#4. Easier To Get Into Financial Trouble
Another downside is getting into financial trouble.
You might be a saver but your partner is a spender.
In this case, they could pile up a lot of credit card debt that you now have to repay as well.
Or if one person brings a lot of debt into the marriage, the other person is now going to be paying a portion of that debt as well.
#5. Potential For Money Fights
Finally, there is the potential for money fights as well.
Since all of your spending comes from a joint account, you see exactly how the other spouse spends.
If you are not OK with how much money they spend on a certain activity, it can cause resentment.
And if your spouse feels like they can’t spend money freely, they might get angry and lash out.
Keeping Finances Separate
According to studies, the average marriage age continues to go higher in the United States.
In 2021 the average age of marriage is close to 30 years old.
This means more people are coming into marriage with assets.
In addition to this, it means they are comfortable with managing their own financial paths.
As such, it can be a shock or even scary to now combine their money with their new spouse.
Let’s look at the pros and cons of keeping separate accounts.
Pros Of Separate Accounts
#1. Your Money Is Safe
When you keep money separate, you don’t have to worry about your partner spending your money.
You have yours and they have theirs and neither person can touch the others.
#2. Both Actively Involved In Managing Money
When couples join their money, many times one person is responsible for money management.
But when you both have your own bills to pay, you are both active participants in the family finances.
#3. Potential For Fewer Money Fights
There is also the potential for fewer fights about money since you are not seeing how your partner spends their money.
Sure you might think they are spending too much on new clothes, but it is their money and as long as they are paying the monthly bills they are responsible for, there is nothing you can do about it.
#4. A More Equitable Approach
If one spouse earns significantly more than the other, you can decide that the higher income earner pays more of the bills than the other.
This makes it more fair for each person, so that one isn’t responsible for paying a larger percentage of their income towards bills.
Cons Of Separate Accounts
#1. Harder To Manage
It is harder to manage individual accounts by far.
You always have to ask the other person if they paid the bills they are responsible for.
Both people have to remember to transfer money into a separate savings account if you are trying to reach a joint goal.
This complexity can be a deterrent to some people.
#2. Easier To Hide Spending
Another downside is it is easier to hide spending.
If you or your partner starts overspending, the other person can be completely unaware until it is too late.
Financial infidelity is a real thing that many people have to deal with.
And keeping your money separate makes this issue a lot more likely to happen.
According to financial planner Tyler Hackenberg, CFP®, “when finances come together, it opens up the means of communication. Marriage is stressful enough. Add a layer of secrecy, then establish an opportunity for a breakdown of communication and unhealthy spending habits.”
#3. Doesn’t Eliminate Relationship Conflict
Some people might choose to keep things separate thinking it will lower the odds of fighting over money.
But the truth is, there will always be conflict, no matter which option you choose.
Even if you have your own money, your partner can think you are overspending and argue with you.
Since they can’t see your account and your financial activity, they can only assume and this will lead them to making things up in their head.
#4. Could Hinder Relationship Growth
By not combining finances, you could stall the growth of your relationship.
Many times you will feel like roommates and not a married couple when you have your own accounts.
This is because money makes up a huge part of our lives and is more of a point of connection than most people realize.
It also is because many people who go this route never set up goals and as a result are never on the same page financially.
The Hybrid Approach
This option is a combination of the two above.
You combine some accounts and leave others separate.
And how you do it exactly is up to you.
So if you want to each put 50% of your money into a joint account to cover the bills. You can do this.
Or you can each choose certain bills to be responsible for, like cable and electric.
Finally, you could do based on income, so each person is contributing their fair share.
Let’s look at the pros and cons of the hybrid approach.
Pros Of Hybrid Finances
#1. Allows For Autonomy
While working together on your financial goals, you still get to be your independent person.
Some money is kept in an individual bank account that you can do with as you please.
#2. Helps Keep On Working Towards Financial Goals
You can easily set up joint goals and put money aside from each of your incomes to help you reach the goal.
This allows both partners to feel like a team.
#3. Great Way To Ease In
Joining accounts can be a shock to many people, so instead of going all in from the start, you can take steps.
Slowly join some of your money now and see how it goes for a few months.
If you like it, you can continue to slowly join more things together, or not.
Cons Of Hybrid Finances
#1. Could Be Complicated
It can be messy trying to keep track of what is combined, who pays for what, how much you each contribute, and so on.
And if you use this approach as a stepping stone, you will always have to relearn and update yourself on who pays what as you make changes.
#2. Income And Expenses Change
You might agree to this method thinking there isn’t much work after you set everything up.
But there is.
Over time, the bills you pay will change in value or you might get rid of or add new bills.
Your income will also change due to raises or promotions.
As a result, you will have to continually update how you organize your finances.
#3. Trust And Control Issues
While these issues can present themselves in in a first marriage, they are more likely to be an issue when you marry for the second time.
Because you were hurt, you might be more hesitant to fully trust your partner.
According to Nathan Mueller, Financial Planner and Coach, “they don’t trust the other spouse for one reason or another or feel the need to control them. The reasons may even be more subconscious than the couples realize.”
Because of this, keeping your finances completely separate might be a better option as you work to improve yourself.
How To Combine Finances After Marriage
If you have decided to merge your finances, where do you start?
Here are some important things to think about and talk about with your spouse.
#1. Be Honest
Before you even start to actively merge your money, you need to do some prep work first.
The first thing to do is remember to always be honest with your spouse.
Ideally, this isn’t your first money conversation so you know all the assets and debts your partner is bringing into the relationship.
If you haven’t now is the time.
Next, you need to talk about how you will pay for things, including things like credit card or student loan debt brought into the marriage.
The more open and honest you are now, the easier things will be down the road.
#2. Discuss Goals
After you have the conversation about all of your finances, now is the time to think about your future.
What goals do you each have in life?
This can be anything from career aspirations, retiring early, buying a house, starting a family, and more.
Put everything on the table and discuss what goals are most important to you both and how you plan to achieve them.
For example, you might agree that you first need to pay off your high interest credit card debt before you start saving for a house.
It helps to break your goals down into short-term, mid-term, and long-term so you can follow along.
It also is good to do this so you know how to divide your savings so you can fund multiple goals at the same time.
Finally, understand these goals are not set in stone.
Life happens and plans change.
You need to be willing to change your goals as you age as well.
#3. Understand Your Partner
Are you a spender and your spouse a saver?
Knowing what type of person you each are will not only go a long way in helping you to reach your goals, but also limit arguments.
For example, if you are a spender, you might find that you feel restricted with a joint account.
To solve this, you could create a small fun account that you put $100 a month into that allows you spend on anything you want, no questions asked.
#4. Create A Monthly Budget
The foundation of any good financial life is a budget.
While this might sound boring to some, the reality is, there are many budget options out there so finding the right one for you won’t be hard.
I recommend you start off with the 50/30/20 rule as it is simple to understand and follow.
Plus as your life changes, you can make small changes to it without having to worry about starting an entirely new budget system.
#5. Open A Joint Bank Account
Now that you did the behind the scenes work, you can open up a joint checking account.
Once opened, you will both have to set up new direct deposit instructions for your paychecks.
Ideally, you will also open a joint savings account too, so you can start building an emergency fund.
In fact, having multiple savings accounts, also known as sinking fund accounts, for each of your goals is even better.
After you do this, then you can determine what investment accounts you want to merge or keep separate.
Understand that you will have to keep your retirement accounts separate, as a joint title is not an option.
When it comes to credit cards, you can choose to keep your individual credit accounts or add your partner to your account as an authorized user.
If you do this, know that you will still have your own credit report and credit scores.
As mentioned before, how you handle combining finances is a personal choice, so don’t think you have to merge your investments.
#6. Have Regular Money Conversations
Finally, when you combine your finances, many times one partner takes on the role of family CFO.
This isn’t a bad thing, but it does become a problem when one person is left in the dark financially.
Because of this, it is critical you have a monthly money conversation with your partner.
This is true even if they have zero interest in your financial situation.
By keeping them informed, you keep your bond strong as you work towards your goals.
Plus, it won’t be a shock to them one day when they want to take an expensive vacation and find out you can’t afford it.
Also, these conversations are a great opportunity to talk more about your goals and if anything has changed.
How To Handle Household Finances With Separate Accounts
If you decide to keep everything separate, there are a few things to consider.
These are the things to think about to make your financial lives easier to manage.
#1. Have Many Open Conversations
The more openly you talk about money, the better.
As I mentioned before, money makes up a much larger part of our lives than we realize.
So by keeping your money separate, there are many opportunities to talk that you miss.
Make sure you set aside time to talk about money at least monthly so you can build that connection with each other.
#2. Consider One Joint Account
Even though you have individual bank accounts, it could be helpful to have a joint checking account just for bills.
With this option, you keep money in your own accounts, but transfer the amount for the bills you are responsible for.
Since you both have access to the shared account, you can both see what household bills are paid and which ones are outstanding, so you don’t have to ask each other.
#3. Split The Bills Equally
Speaking of bills, instead of totaling them up and each person paying the same amount, take into account each person’s income.
If you make $100,000 annually and your spouse makes $50,000 then you should pay two-thirds of the bills to make it fair.
For example, if your monthly bills total $5,000 a much larger percentage of your spouse’s income is going towards bills than yours.
As a result, they have less money to spend on the things they enjoy.
#3. Create Joint Goals
Having joint goals is critical as this will help you feel like you are team when it comes to your money.
Sit down and dream about your goals, then organize them and set up a plan to reach them.
The sooner your do this, the easier long-term financial planning will be for you as you will both be on the same page with what you want out of life.
There is how to determine if you should combine finances when married.
As I said at the start, there is no one size fits all solution here.
Some couples swear by joining their money, while other work best by keeping things separate.
You have to look at who you both are and how you live life to determine which one is best for you.
With that said, no matter which one you choose, you need to be open and honest with your partner at all times as well as have money conversations on a regular basis.
I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.