Love and Money: How to Successfully Combine Finances After the Wedding Bells Stop Ringing
By Mark Yatros
Lots of wedding bells will be ringing in the U.S. this year. According to Zippia, 2.24 million couples are expected to tie the knot in 2023. If you’re among the couples heading to the altar this year, it’s time to talk money with your intended.
I know that talking about money isn’t as exciting as choosing flowers, deciding if you’ll serve chicken or fish at the reception, or picking your honeymoon destination. But, in the end, getting on the same financial page with your fiancé will help you achieve a long, happy marriage.
One of the most significant decisions you’ll need to make is if you’ll combine all, part, or none of your finances. There isn’t a right or wrong answer to how to combine finances after marriage because each couple’s situation differs. What’s most important is having the discussion and deciding how to move forward in a way that supports your joint goals and values.
Key Considerations When Deciding How to Combine Finances After Marriage
There are a few questions to ask yourselves when deciding if and how you’ll combine your financial lives.
What are your financial goals and priorities? Create a list of goals and priorities that are important to you both.
How will you deal with debt being brought into the marriage? Be it credit card debts, student loans, or car notes, decide who’s responsible for paying each debt.
Who will have day-to-day responsibility for your finances? You both must understand your financial plan and have access to all shared accounts, but often it is easier to have one person who pays the bills.
Four Ways to Handle Money After Marriage
Keep all finances separate; each pays your own bills while splitting joint bills equally.
Keep finances separate and assign specific bills to each person according to income.
Combine all finances into joint accounts.
Combine all finances but agree that each person will have a set amount of money to spend without questions from the other spouse.
Benefits of Combining Finances After Marriage
Traditionally, couples pooled all their money after they married, and it’s still the case that most couples combine at least some of their finances. Some of the benefits of combining finances are:
It’s simpler – Combining your finances can make your financial life easier to manage. You won't have to juggle multiple accounts and budgets, and you can create a joint account to handle shared expenses like rent, groceries, and bills.
You’re in it together – Sharing your finances with your partner can help build trust in your relationship. When you're both on the same page about money, it can create a sense of transparency and honesty that can strengthen your bond. You’ll replace “mine” and “yours” with “ours.”
You’ll have joint financial goals – Combining finances can help you and your partner work towards shared financial goals, such as saving for a down payment on a house or a dream vacation. It can also make planning for long-term financial goals like retirement easier.
It helps you budget better – Combining your finances can help you develop better spending and budgeting habits. You can create a joint budget and track your expenses together, which can help you identify areas where you can save money and cut back on unnecessary expenses.
Drawbacks of combining finances
While the benefits of combining your finances are appealing, there are some potential downsides that you should consider:
You may feel you’ve lost financial independence – When you combine your finances, both partners are accountable to each other for every financial decision. It may lead to a loss of financial autonomy, and you may need to get the green light from your partner before making any significant financial moves.
You might disagree on spending – Money matters can be a significant source of disagreement in any relationship. Combining your finances could amplify this if you have different attitudes toward spending and saving money.
You may feel like you're losing your privacy – When you combine finances, both partners can access all financial records, including account balances, transactions, and debts. It may feel a bit intrusive, especially if you're used to managing your money and don't like the idea of sharing it all.
Financial instability is a risk – Combining finances means that both partners are equally responsible for any financial obligations, including debts and loans. If one partner makes poor money decisions or has financial instability, it can negatively impact the other partner's financial stability. This is something to consider if you or your partner are not particularly savvy with money.
How to combine finances successfully
Once you decide to pool all or some of your finances, you’ll need to determine how to do it. Here are some tips for successfully combining finances with your spouse:
Be open and honest – When it comes to money, honesty is vital. Be transparent about your financial situation and any debts or financial obligations. Discuss your financial goals and expectations and be willing to compromise to find a financial plan that works for both of you.
Create a joint budget – Create a budget that includes all your shared expenses. This should include rent or mortgage, utilities, groceries, etc. Be sure also to set aside money for savings and any individual expenses you may have. Please check out my 5 Simple Steps to Creating Your Budget blog for a budgeting roadmap.
Decide if you want individual accounts – Even if you combine most of your finances, you may want to keep individual accounts for personal expenses. Decide together how much you will keep in your separate accounts.
Set spending limits – It's important to set spending limits and discuss any large purchases before making them. This can help prevent surprises and ensure you’re on the same page about your finances.
Discuss long-term financial goals – Talk about your long-term financial goals as a couple and work together to create a plan to achieve them. This could include saving for a down payment on a house, paying off credit card debt, or investing in retirement accounts.
Keep the lines of communication open – Regularly check in with each other about your finances and be willing to adjust your plan as needed. Being open and honest about your financial situation can help prevent surprises and ensure you work towards the same goals.
Common mistakes to avoid when managing finances as a married couple
Regardless of whether you combine finances altogether or hold some accounts separate, there are some common mistakes you’ll want to avoid, such as:
Not communicating about money – Communication is critical when managing finances as a couple. Regularly check in with each other about your finances and be willing to adjust your plan as needed. Poor communication can lead to misunderstandings and financial misalignment.
Hiding financial information – Keeping financial secrets from your spouse can erode trust in your relationship. Be open and honest about your finances, including any debts or financial obligations.
Not discussing financial goals – It's important to discuss your goals as a couple and work together to create a plan to achieve them. Not doing so can lead to financial misalignment and disagreements down the road.
Overspending – Overspending can put a strain on your finances and your relationship. Be sure to create a budget, stick to it, and set spending limits for any optional expenses.
Not having an emergency fund – It's essential to have an emergency fund to cover unexpected expenses like car repairs or medical bills. Not having one can strain your finances and cause stress in your relationship.
Consider Getting Guidance
There’s much to consider when deciding how to handle your finances as a newly married couple. Consider seeking independent guidance from a financial advisor to be sure you’re starting married life on the soundest financial footing possible.
My team and I are happy to help. Contact us for a free consultation at 269-218-2100 or here.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to ensure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Allegiant Wealth Strategies offers securities and advisory services through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Allegiant Wealth Strategies has offices in Battle Creek and Portage, Michigan, from which we serve Calhoun County, Kalamazoo County, and Kent County (Grand Rapids). The Allegiant Wealth Strategies team offers no-obligation financial planning consultations; call 269-218-2100 or contact us here.