Should You Combine Finances After Marriage?

So you’ve tied the knot, or you’re about to, and you’re thinking about what needs to get done after the wedding. On your post-nuptials to-do list is changing your last name, combining finances, and moving in together… or maybe none of those things.

While traditionally American couples do all of that stuff after marriage, that isn’t the case for many millennials tying the knot these days. Women are keeping their maiden names, living in sin with their lover pre-wedding, and wondering whether they should combine all of their money with their spouse or not. But no matter what your situation is, to have a successful marriage, you’ll need to get on the same page with your partner about finances at some point. 

What you may be surprised to hear from this finance fanatic is that I don’t think there is a “correct” way to do that. That’s because we all have what I’ll call, money shit. These are habits, thoughts, and expectations about our money that are based on the money lessons, or lack thereof, we were taught during our childhood, how our gender has affected our pay, how we view monetary gender roles, and what our socioeconomic status was growing up. 

With so many factors contributing to our individual perceptions of money, expecting that there’s one solution for every couple is a recipe for disaster. And don’t just take my word for it. Take a look at the data. Depending on the source, finances are either the number one or number two cause for divorce in the United States, so the idea that there is a one size fits all solution to this is ludicrous. 

To help you navigate one of the toughest topics in your marriage, we’re breaking down the pros and cons of the three financial strategies you can use to handle your finances as a couple.

Keep Everything Separate

With this strategy, you both will just keep doing what you’re doing. All of your money will still get deposited into a bank account in your name, and all of your partner’s money will get deposited into their bank account. 

This strategy can be really helpful for couples who think they’ll have arguments if they become aware of their partner’s personal spending habits. For example, if you’re a makeup lover and spend hundreds of dollars every few months buying new products at Sephora, your partner may be alarmed when they see this and think it’s a poor use of your money. In every couple, there is at least one thing the other person buys that you’ll think is a total waste of money. That doesn’t mean they should stop buying it, though. 

As long as you aren’t lying about your spending and you’re paying your portion of the shared expenses, you should be able to spend your money on personal items that make you happy. By keeping separate accounts, this “frivolous” spending isn’t as noticeable to your partner, which can reduce the number of arguments it causes.

While disputes about personal spending may be less frequent if you decide to use separate accounts, figuring out how to cover unexpected expenses may do the opposite. To avoid these confrontations, you’ll need to have open and honest dialogues about how each of you will contribute to all shared and unexpected expenses. Will you split all of the bills evenly? Will one of you pay for certain expenses, and the other cover different ones? Will you have separate emergency funds, and how much will each of you keep in them? When emergencies happen, who pays for what? Ironing this stuff out upfront will help you avoid arguments later when unexpected expenses come up or your goals change. 

Pros

• Don’t have to open new accounts
• Personal spending is more private which may minimize arguments
• Maintaining control over your own finances may give you a sense of stability

Cons

• Unexpected expenses may be more difficult to sort through
• More upfront discussion about the expectation of each person’s contribution to shared expenses is required
• Less transparency of the other person’s financials can create anxiety

Combine Everything

The complete opposite of the first strategy is to combine everything. That means all of your money will get deposited into the same checking account, all of your bills will be paid from the same account, all of your savings will be shared, etc. 

The great thing about this strategy is that it is highly transparent so both people can see the current financial situation at all times. While initially joining everything will be a pain, once your joint accounts are set up, you can automate all of your bills, savings, and investments to come out of the same place. This means you can skip the conversations about who will pay for what and what the fair portion is for each of you based on your salaries, which brings me to my next point.

Many couples are in a situation where one person makes significantly more money than the other person. Before joining your finances, the breadwinner may have covered more of your joint expenses, like date nights, but they also may have just had more money to spend on themselves. When you join accounts, conversations about how you’ll handle personal spending will inevitably come up.

Like in my earlier example, your $300 Sephora purchase may alarm your partner. To avoid arguments every time someone buys something for themselves, you can determine a dollar amount that requires discussion. For example, if you decide as a couple that all purchases over $200 have to be discussed, you would need to agree on the $300 Sephora purchase before making it, or spend less than $200 on your shopping trip. 

Another way to handle this is to set a budget for each person to spend on themselves every month and a separate budget for your joint discretionary spending. When determining your budget, it’s best to start with your joint spending first. Determine how much you want to spend on things like date nights, dinners, and anything else you do together. Then take the balance of your discretionary income and divide it up for each of you to spend individually. The amount doesn’t need to be equal, but both partners should be happy and in agreement on the amount each person is getting.

Pros

• Highly transparent view of your overall financial situation for both partners
• No need to discuss who will pay for each bill because they all get paid from the same account
• Having the full picture of your financial situation can reduce anxiety

Cons

• Personal discretionary spending could lead to arguments
• You have to go through the tedious process of setting up a joint account, transferring funds, and setting up new automatic bill payments
• May feel like you’re giving up some control of your finances

Hybrid Approach

The last option is a hybrid approach, where you combine some parts of your finances and leave others separate.

A common way to do this is to create a joint account for shared expenses, like bills and savings, and keep everything else separate. This can be a great way to make paying bills easier and can help minimize arguments about personal spending. 

If you decide on this approach, it’s still important to discuss how much each person will contribute to your joint account. If one person makes 2 or 3 times as much as the other, you may decide that they will contribute more to your joint account than the person making less. There’s no perfect solution, but you should be in agreement on whatever you decide.

Setting up additional joint accounts for your emergency savings or to reach a future goal, like buying a house, can also help create transparency and allow you to work as a team to reach your goals. Again, it’s important to discuss the amount each person will contribute to these accounts and be in agreement on whatever you decide.

Pros

• Minimize arguments about personal spending habits
• Easily pay bills from a single account
• Setting up joint savings and investment accounts gives more transparency to both partners

Cons

• Have to go through setting up a joint account and automatic contributions into that account
• Need to have more discussions about how much each person will contribute to joint accounts
• Every time a new account is open, a discussion should be had on whether the account will be joint or separate and how contributions and withdrawals will be handled

Key Takeaways

No matter what you hear, there is no one size fits all approach to handling finances as a couple. The most important things you can do as a couple to be successful with money in your relationship are

• Discuss your money honestly and often. Each person should have a clear understanding of the other person’s financial situation. The good, the bad, and the ugly. This article will help you with your initial financial setup, but you should have frequent money conversations going forward.
• Don’t lie or hide money. Many people secretly put money into a separate account or run up credit card debt and don’t tell their partner. If this is you, this habit can be incredibly destructive and can also indicate bigger issues in your relationship.
• Set realistic expectations. Your partner will not see eye to eye with you on everything financially, and that’s ok. Designate money duties for each of you that aligns with your goals and money management style. (Check out my earlier post on how to set these roles up.)
• Know that your partner is going to spend money on “dumb shit”, but so are you. Agree on a max spend amount to avoid getting upset with every personal purchase your partner makes.
• NEVER SAY YOU AGREE TO IT IF YOU DON’T! If you have an issue with how you and your partner handle your finances, it’s your job to bring that up and work to find a better solution. If the other person is left in the dark about your true feelings, they can’t work with you to fix the situation.

While money is the number two cause of divorce, by developing a financial strategy that works well for your relationship you can create an environment where you can thrive financially and achieve huge life goals together. Whichever strategy you choose, the most important thing to remember is that if it works well for you and your partner, it doesn’t matter what everyone else says.