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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 article, 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.
Table of Contents
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.
Related: Here are clever frugal date ideas
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 monthly 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 save money when you combine your finances.
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.
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.