Yours, Mine, and Ours: Combining Finances as a Married Couple
You've met the person you want to spend the rest of your life with. Here's how to get on the same page about spending, and saving, for a lifetime of happiness.
They say when you meet the one you just know, but you might not know how marriage will affect your finances—or how your finances will affect your marriage. And money can be a huge deal, especially if you’re younger. In a survey by the American Institute of CPAs, a staggering 88 percent of cohabitating couples between 25 and 34 years old said financial decisions cause friction in their relationship. Money problems are often blamed as a leading cause of divorce, but the real issues stem from how we react to financial stress. Figuring out how you’ll handle money well before you say “I do” can help keep those honeymoon fires burning.
The Big Picture
You don’t need to nail down a financial plan all at once, just start talking. Pick a time when you won’t be stressed out or distracted by something else (like your kids or work), and preferably when you won’t be hangry. Schedule discussions ahead of time so that nobody is caught by surprise.
Develop a basic understanding of what you want your life together to look like. Your goals will change over time, but you can start heading in the right direction.
Take inventory: If you haven’t already done so, share details about your finances. Your income, spending habits, savings, debts, and credit score—lay it all on the line. Once you both know where you stand, you’ll know what resources are available and what challenges you’ll need to overcome.
Set goals: Talk about how you’d like the future to unfold. Want to save for retirement, a vacation home, or exotic vacations every year? If children are in the cards, will you pay for private school and college? Do you want to live in a tiny home or a mansion? Knowing what you’re working toward will make planning easier as you go along.
Prioritize: You won’t be able to accomplish everything you want (unless you really married well), so decide what’s most important.
Plan: With a goal in mind, start planning the concrete steps required to get there. If you want to retire at age 55, for example, you’ll need to save a certain amount each month. Figure out that number.
Set up a system: Decide who will handle the bills and day-to-day money management. The money manager doesn’t need to be the person who earns and contributes the most, but both of you need to know what’s going on with your family finances. Agree on how much you’re allowed to spend without consulting the other. (Anything below $100 is fine, for example.) Schedule regular updates until you’ve got your financial routine down.
Along with consistent budgeting meetings, combining finances is another not-so-sexy aspect of your new marriage. Congrats! The topic is controversial, but ultimately, the best way to handle things is the one that works for both of you. Thankfully, you have several options.
1. Merge Everything
The simplest approach is to combine everything and act as a single familial and financial unit. You’ll both deposit into—and spend from—a joint account.
Pros: This approach is simple. You have easy access to the account, and there’s never any need to hash out who covers what expense. Everything is shared. If one of you stops working, you need not revisit who pays for what (e.g.: one of you covers the cable bill, the other buys the groceries).
Cons: Personal spending can get tricky. It might feel weird to spend family money on things like treating a friend to lunch or a new video game for yourself. You might even feel a lack of autonomy, and tension can arise when one partner spends significantly more than the other.
2. Ours, Yours, and Mine
A similar approach is to use joint accounts for shared expenses, while keeping your own account for personal expenses.
Pros: You’re working together, and you have your own money. Nobody can judge you for your personal spending, and it’s easier to buy gifts and surprise your spouse.
Cons: You need to figure out how much to transfer between accounts, and mistakes can lead to insufficient funds charges or missed payments. You’ll have to deal with irregular expenses—like a new water heater or furnace—as they happen, which takes additional time and energy to coordinate.
3. Keep Things Separate
You can live together without making any changes to your accounts—just let things continue as they were before you got married. For most couples, this means each partner takes responsibility for one or two expenses—you might pay the rent, and your partner pays for utilities and groceries. If everybody’s happy and the bills get paid, there’s no need for a joint account.
Pros: You won’t need to adjust direct deposits or bill payments, and you probably won’t need to change your spending habits. You’re in control of your money, and nobody tells you what to do with it.
Cons: It’s easy for something to slip through the cracks if one person gets busy. Also, you’re duplicating efforts as you both need to budget. You might even end up with excess cash that could have been put to better use. Finally, this arrangement can be uncomfortable for a partner who values sharing and transparency.
Beyond figuring out how to structure your accounts, you might wonder how much each of you should contribute to shared expenses. If you both earn more or less the same, it’s easy to split costs down the middle. But when one of you makes significantly more than the other, things can get complicated.
Share everything: Again, this approach is the simplest. (That doesn’t necessarily make it the best.) Everything goes into one pot, and that’s all there is to it.
Share proportionally: You both contribute a portion of your income toward shared expenses. For example, you both transfer 25 percent of your earnings to the joint account (or whatever number it takes to cover costs). With this method, the higher-income earner puts more dollars into the account, but the portion of income is equal.
Go halfsies: You could also split expenses 50-50. While this is a fairly simple approach, it can be a burden for the partner who earns less, and it can prevent the higher-earning spouse from contributing to upgrades that you could technically afford and would likely appreciate. (Think a nicer apartment, or faster internet.)
Marriage and Credit
Managing your credit will be easier than setting up your day-to-day finances, at least at first. Your credit will remain your own, and there’s no way to combine credit reports or scores. Loans in your name stay in your name, and existing problems in your spouse’s credit will not affect your credit.
Going forward, you and your spouse might apply for loans together, and any loans under both of your names will affect both credit scores. Regardless of who is supposed to make payments, both of your scores are on the line.
It’s helpful if both of you have good credit in case you want to apply for a large loan—like a mortgage—together down the line. Work on keeping (or building) high scores for yourself and your spouse. Don’t be tempted to just put everything in the primary breadwinner’s name. Both of you should continue to use credit so that you both have good credit scores for life.
A Word About Sharing
There are good reasons for keeping certain things separate. However, when most people imagine an open and honest relationship, hidden assets or expenses (or even debt) are not part of that picture. You’re in this for the long haul, and it’ll be more enjoyable if you trust each other.
Still, you might decide to keep some assets separate. For example, inheritances often come with a strong emotional attachment, and your partner should respect your desire to handle that money the way you want. Again, good communication is the key to navigating these situations and coming out with a stronger relationship.
Finally, get familiar with your state laws. You might end up sharing assets (and debts) that build up during the marriage—even if you didn’t plan to.