Is Combining Finances After Marriage Right For You?

The BIG DAY has finally arrived. Guests arrive, the wedding party is ready, and every final detail is complete! All that’s left is to say, “I Do!”

Actually, getting married is only the beginning of building your life together. And one of the most important parts of starting your marriage is learning how to handle your finances and work together on how best to manage your money.

In fact, in a 2017 study by Ramsey Solutions, they found that 94% of families with “Great Marriages” said they regularly discuss their money dreams together (vs. 45% with “OK” or “In Crisis” marriages). Getting on the same page about money with your spouse matters.

So, whether you plan on combining your finances after marriage or maintaining separate accounts, this guide reveals the pros and cons of each approach. You’ll also learn the benefits of working with a financial coach or financial advisor and what to consider if you prefer to do it yourself.

What Does Combining Finances Mean?

Combining your finances is the act of joining your bank accounts, assets, bills, and every other financial account with your spouse. This means you will open joint bank accounts, add your spouse as a beneficiary or owner of your home, cars, life insurance, etc., and call your utilities, subscriptions, and other services to ensure you are both administrators of the accounts.

This also means developing a joint plan for your finances from now on. You both want to be on the same page financially, so you will discuss your BIG GOALS and how to get there.

Potential Benefits of Combining Finances After Marriage

Combining your finances after a marriage has many great benefits and affects more than just money.

Better Communication, More Trust

When you combine ALL your financial accounts, it forces you to communicate better with your spouse. Once combined, you are now both part of every money decision from now on, meaning that you will both need to work together and compromise on where your money goes.

This will mean more frequent conversations about money. Which is a GOOD THING!

In the study by Ramsey Solutions, they found that 54% of families with “Great Marriages” said they talk Daily or Weekly with their spouses about money (vs. 29% with “OK” or “In Crisis” marriages).

Combining your finances also means there is a less likely chance of committing financial infidelity. When you combine your money, you both show that you trust your spouse and that you have nothing to hide financially.

Better communication = better marriage.

Accountability

When your money is combined, you become each other’s accountability partner with your spending habits. Assuming you’ve both put together a budget and a plan for your money, you can now see where the money is going and help each other stay on track toward your financial goals.?

Yes, it may lead to some uncomfortable discussions, but it will also allow you to help each other stick to the plan you both agreed on.

Simplification

With joint financial accounts, your day-to-day money handling is much more simplified. Paying bills, managing a budget, and planning your financial goals are much easier if you are not trying to balance two separate pools of money.

Also, if the worst happens, and one spouse passes away, in most cases, the other spouse has immediate access to all your money (and less paperwork/legal struggles).

Better Credit Scores

While combining your accounts does not directly affect your individual credit score, it can help you gain access to better joint rates and higher loan amounts once your assets are combined.

Plus, good credit activity on your joint accounts (on-time payments, lower debt-to-credit ratios) can positively impact your credit score in the long run.

Potential Drawbacks of Combining Finances After Marriage

Combining your finances after marriage may not be for everyone. Here are a few possible downsides to combining your finances in marriage.

Difficult To Separate Accounts

If, for some reason, you split up with your spouse, separating all your accounts will take a bit of work. And not to mention, there are legal implications during a divorce to getting your accounts separated, and it may get very complicated (and expensive).

Less Independence

Once your accounts are combined, you will have eyes on each other’s spending. While this can have some good benefits, it can also feel like you are losing some of your independence. Accounting for everything your spouse spends may feel cumbersome and could lead to money fights.

Negative Impact On Credit

Combining your financial accounts doesn’t impact your individual credit score but can lower your access to financial products, such as loans and credit cards if you apply jointly and one spouse has a much lower score or higher debt balances.

And if you start missing payments or running up the credit card and loan balances, it could also negatively affect your scores.

One Spouse Can Take All The Money

Obviously, this would be much more than just a financial problem; combining your assets and bank accounts gives both spouses access to ALL the money. This means if things were heading south, one spouse could potentially “take the money and run.”

No one plans for this situation, but it has happened too often to ignore (unfortunately). Combining your finances means you must trust your spouse will not do this.

How to Discuss Combining Finances with Your Spouse

If you have decided to combine your finances after marriage, your conversations should start as soon as possible. In fact, if you are still single, start talking about it NOW, before you tie the knot!

Here are a few ways to start discussing combining your finances.

Dream Together

Before you get down to the dollars and cents, try sitting down together and having a “dream session.” This is a low-key way to talk about money without busting out a spreadsheet!

During this Dream Session, set aside some uninterrupted time to talk about what you want life to look like with your spouse.?

Here are a few questions to get you started:

• What do you want life to look like in 5 years? 10 years?
• Where should we live?
• If money was no object, how would you spend your time?
• When do you want to retire?
• Do you want to buy a house?

You can talk about anything, including financial goals, but the goal here is to freely let your ideas and dreams about your future together flow.

The goal is to build trust and start imagining a future together.

Talk In Detail About How To Handle Your Money

Once you have talked through what you WANT life to look like, talk about some of the big-picture ideas you have about money. This includes handling things like debt, investing, saving, and large purchases (such as cars).

The idea is to see where you both align (and don’t align) in your beliefs about how to handle life’s BIGGER financial decisions.

If you disagree, this is where financial education comes into the picture. For each disagreement, do some research, and find out where you can both compromise to come up with a joint plan for your money.

Create A Budget

And finally, get on a written budget. This will be your roadmap for how to handle your money day to day. This includes discussing your income, bills, spending and saving strategies.?

You should both discuss questions like:

• How much should we save?
• How should we handle debt?
• What are our investing goals?
• What should we spend money on?
• How much individual spending money do we get?

All of these details should be captured in your monthly budget plan.

Talk About What Accounts To Combine First

Once you both have discussed some of your big plans and are on a written budget, it’s time to discuss what steps to take first. Usually, this starts with opening joint checking and savings accounts and talking about handling things like paychecks and bills.

Make an action plan for opening the day-to-day money accounts first (more on that below), and then talk about other accounts such as debt (loans, credit cards) and investment accounts.

The goal is to discuss your next steps once you combine your accounts.

How to Get Started Combining Your Finances

To get started on combining your finances, here are the first few steps you should take:

1. Open a joint checking and savings account.
2. This will give you a place to make your day-to-day purchases from. You can also choose to use one spouse’s individual account to keep, add the other spouse to the account as an owner, and then move all the funds over (this should be done on the phone or in person).
3. Set your direct deposit to your joint account.
4. This will funnel all your income to your newly created joint account. Talk to your HR Department to get this set up.
5. Move your automated bill pay to the new joint account.
6. Before you close out any individual accounts, make sure any bills being automatically paid to get moved to the NEW joint account.
7. Close out any unused individual accounts.
8. If you want to simply use the new accounts from now on, make sure to set aside time to close out any individual accounts you will no longer be using. This usually requires a phone call and cannot be done online. (make sure all automatic bill pay and direct deposits are moved to the new account BEFORE closing).

This will get your day-to-day finances set up so that you can manage them together.

Additional Accounts To Combine

In addition to your bank accounts, here’s a quick list of accounts to consider combining after marriage. Most of these are as simple as adding your spouse as an owner or beneficiary.

• Investment Accounts
• Life Insurance
• Mortgage (may require to refinance)
• Other Assets

The idea here is the “what’s mine is yours” approach, which is the deepest financial commitment level. And as you open additional financial accounts in the future, both of your names will be on them.

How to Maintain Healthy Habits After Combining Your Finances

Once you have combined your financial accounts, you want to ensure everything runs smoothly. Here are a few tips on making your combined finances a dream come true (and not a nightmare!).

1. Have A Monthly Budget Meeting. Honestly, I recommend doing this weekly for the first few months. There are typically many moving parts, and keeping your communication open about your combined finances is the key to avoiding money fights. Review your budget, talk about what worked, what didn’t, and how you can make next week (or month) even better.
2. Keep an eye on your transactions. Once your finances are combined, keeping a close eye on your transactions is a good idea. You are both used to spending on your own schedule and timeline, and missed communication about a purchase might lead to an overdraft. I recommend setting up transaction alerts to make sure you can both see what’s going on.
3. Assign money roles. In most marriages, it’s rare that both spouses want the same level of involvement regarding the day-to-day finances. Typically one likes more detail than the other (in our marriage, that’s definitely me!) and may take over the budget and bill paying. Find out who wants to take on the bulk of handling the accounts and details, but make sure not to let that spouse TAKE OVER completely. Combining your finances is a two-way street; you need to know exactly what’s happening with your money, so even if you don’t check account balances daily, you have an idea of where your money is going.
4. Celebrate your wins together! This is an important habit to start. Especially when one (or both of you) brings debt into the marriage, it can feel discouraging. But celebrating your financial milestones (paying off a credit card, saving an emergency fund) can hugely impact your financial happiness and marriage. It also gives you confidence that you are in this together and making progress.

Final Thoughts On Combining Finances After Marriage

Your marriage is built on trust and compromise, and combining your finances can help you learn both. It will build more trust and communication and help you both learn the give & take of compromising on your life decisions.

If you want to combine your finances, make sure you take your time, discuss everything openly, and bring in a financial professional to help you create a money plan, you are both excited about.

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Author: Cecil Staton, CFP? CSLP?

I'm a fee-only financial planner dentists & physicians with student loans give a purpose to their paycheck.

I left the large financial institutions to start my own RIA. I did it so people could pay for real planning and not just an agenda to sell a hidden product. As a fiduciary, Arch Financial Planning, LLC was built on that promise by delivering non-cookie-cutter plans that provide solutions to achieve their goals.

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Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. Before making major financial decisions, please speak with us or another qualified professional for guidance. The original version of this article first appeared on Wealthtender.