Combining Finances After Marriage
March 31st, 2017
Once you’re married, you need to decide how to merge both of your finances. If you have similar views on financial matters, that may not be too difficult. However, those with very different views may find it harder to combine their finances.
Consider these tips:
Candidly discuss each of your finances. Even if you’ve known each other for a long time, you might not know much about each other’s financial situations. Explore those issues now so that you’re not surprised in the future. Find out the answers to questions like: How much does each of you save every pay period? What is your total savings? How much debt is each bringing to the marriage? Do you pay the minimum amount on credit card debt or the entire balance every month? Has either of you ever filed bankruptcy? How is your credit rating?
Track expenses for a month. This gives you an idea of where your income goes – a good starting place for deciding how to spend money in the future. It also highlights areas where the two of you differ regarding finances.
Prepare a written budget. Establishing a budget for the next year forces you to make decisions on how to spend your income, which will likely result in compromises on both of your parts. While that might seem like a painful process, addressing these issues now can help prevent future misunderstandings. It is often easier to discuss spending preferences on a theoretical basis than it is to argue about actual purchases.
Decide on joint or separate bank accounts. Some couples prefer pooling all funds, thinking it helps create a feeling of unity. Others, however, have difficulty losing their financial autonomy, especially if they’ve been on their own for many years. Keep in mind that this is not an either/or decision. You can set up a joint account for shared expenses, with each spouse contributing a pre-designated amount to the account. For the remaining funds, separate accounts can be kept for discretionary spending.
Split financial responsibilities. Decide who will handle financial tasks, such as paying bills, preparing tax returns and making investment decisions. One person may be more suited for these tasks due to a certain background or time availability. However, the other spouse should not give up total control.
Discuss financial matters periodically. Set up a formal time, perhaps monthly, to go over all financial matters. This keeps both spouses fully informed and provides a designated time to discuss future spending or items of concern. You then won’t worry about how to bring up financial topics or allow finances to interfere during other times.