You’re in love! You found the One, your soul mate, the person you want to spend the rest of your life with! Congratulations. Now let’s talk about the merging of assets. Doesn’t that sound romantic?
The personal finance blogosphere has yet to come to a consensus on joint vs. separate finances. While I am in the joint finances camp, I do respect that others have different opinions and different ways of doing things. That’s cool! You do you, I’ll do me, and we’ll all be friends.
Why combine finances?
The benefit of combining all of a couple’s money is that it may foster a feeling of oneness as “my” becomes “us.” More realistically, combining wealth may protect both couples from the ups and downs of their own fortunes. Sharing funds and combining funds may also aid couples in supporting each other during times of crisis or when they need more financial assistance.
– It’s easier! Bill paying and joint savings goals are much easier with merged accounts.
– It holds you accountable! My husband doesn’t tell me how much to spend or how to spend it, but I am way less likely to spend like a coked-up rockstar when the money is ours. He’s my favorite accountabilibuddy!
– Why not? I don’t really see a downside*. I trust my S.O. with money, we have the same financial goals, and we keep each other in check. Win, win, win!
How to combine finances
Decide that you want to.
Sit down with your S.O. and have a serious conversation about your finances. Decide if you can stand to see him spend all his fun money on energy drinks. Decide if he can stand to see you drop $100 at MAC. Figure out your joint financial goals and decide if a joint account would be best for you!
Write it all down.
Now that you know you want to combine, figure out exactly what it is that you are combining! Write down all of your expenses together. This is the perfect time to clean house and weed out anything that is no longer necessary — like his WoW subscription!
Choose a bank.
It is generally easier if one of you transfers over to the others bank. Unless you both hate your banks, then open up a new account. I recommend opening up one checking account and at least one savings account.
Transfer over direct deposit.
If one or both of you is changing banks, don’t forget to update your direct deposit information. Word to the wise — DO NOT close your existing bank account until you physically see your check deposited correctly. Sometimes it takes one or more pay periods to get it sorted out.
Update existing automatic bill pay information.
No one wants to be harassed by debt collectors because they forgot to update their bill pay information. I’m pretty sure not paying your electric bill for six months is frowned upon.
If you don’t currently pay your bills automatically online, why not? Set that up immediately! It’s 2013, Old School! Provided you have a steady, regular income, it will make your life considerably easier.
Set up your first joint savings goal.
Want to buy a house in five years? Or travel the world together? Or procreate? Start saving for it! Automate a transfer to that joint savings account you set up earlier — weekly, biweekly, monthly, whatever — I would recommend setting the transfer up to coincide with pay day.
You’re done! Assets merged! It’s a pain in the ass at first, but it will save you time and stress for the rest of your life. Now you have more time for making googly eyes at each other.
Should you combine finances when you get married today?
Every couple’s definition of joint finances is different. Some couples keep their finances largely separate, with just one or two bank accounts shared. Other couples combine everything, including bank accounts, credit cards, and investment accounts. There is no right or wrong option when it comes to pooling money. Rather, it is critical to identify the ideal option for you and your spouse.
When a couple marries, they often combine their money. It may make money easier to handle and assist couples in working together toward long-term objectives. However, this is a personal choice, and there may be reasons why you do not want to, such as one individual having a bad credit history. You may determine how you’ll manage your money in marriage after you realise what you’re up against. A prenuptial agreement may be necessary if one spouse has much more assets or earning ability than the other. These agreements may safeguard premarital assets while also providing for children from past marriages.
They may also establish accountability for debts incurred before to marriage and provide for spousal support in the event of divorce. One of the most common questions/concerns about merging funds after marriage is whether or not to merge bank accounts. There are no regulations here either. You may have joint checking and savings accounts, as well as separate checking accounts for your own purposes. Discuss your choices as a couple and determine what is best for you.
What if your partner does not want to combine finance?
Your spouse may object to combining your funds for a variety of reasons. One possibility is that they previously partnered with someone who did not work out. Perhaps they are worried about your financial management. They may also be hesitant to completely reveal their present debt, preferring to keep things separate to protect you. To have completely merged accounts, you must communicate and be transparent with your partner. People in their honeymoon period don’t want to think about it, but separating assets and establishing who gets what (and who donated what) might be a tremendous nightmare in the case of a separation or divorce.
It is important to recognise that your spouse may have valid reasons for being hesitant to integrate funds. These might include financial troubles from prior partnerships or worries about your spending habits. To be fair, however, shared expenditures should be shared. It’s critical to start talking about money as soon as possible.
What are some tips for couples fighting over finances?
Money is the most contentious topic between married couples, and it is a primary cause of divorce. This is why dealing with money in a healthy manner is more important than the money itself. Communication and honesty in relaying expectations, ambitions, objectives, and worries are the greatest ways to deal with such marital pressures. Couples should also cultivate empathy, be mature enough to check their egos, and give up any desire for control. That is, indeed, far easier said than done. And, no, there is no magic bullet.
Having only one spouse handle the home budget is a major no-no, whether you have a one-income household or both partners work. It may not only keep one side of the partnership in the dark about finances, but it can also lead to misunderstanding and mistrust between the couple. Instead of waiting until things reach a tipping point, make it a weekly event. Make it a weekly event that is presented as you working together as a team to discuss what you are going to accomplish with your money this month. In most marriages, the total of a couple’s combined financial knowledge is less than half of what one individual need.
Are you in the joint or separate finances camp? Why? What advice would you give to new couples merging their accounts?
*Many people are concerned with the possibility of divorce. However, in many states, assets are equally divided anyways regardless of whose name is on the account. 50% of marriages may end in divorce, but 50% of marriages last — remember that.