Marriage - Combining Finances

[Bades]

Thoughts on handling finances after marriage...

I know there are definitely generational gaps here. My dad has worked his whole life and my mom took care of five kids. She never really worried about money as my dad makes good money and she spends very reasonably anyway.

My generation (24years old) is a bit different. Young adults these days seem to have a lot more financial responsibility. CC's, student loans, auto loans, mortgages, etc. We have easier and more tempting ways of buying things, Amazon, Ebay, App Stores, other technologies. More then ever people have to be much more financially aware then ever.

Looking towards marriage in the next couple years I actually see a benefit in keeping separate bank accounts for some period of time. For instance my gf gets excited when she saves X amount of money each month, and she feels pride in doing so (which is awesome!). However, if we were to combine our income together into one account it will be easy to think we have plenty of money and holding back on certain purchases wouldn't be necessary. I think having a joint account allows one of the spouses to become a bit lazier in regards to keeping track of their financials. I believe it's very important for each spouse to be not only concerned but contributing to a better financial well-being.

Now Im not saying this can't be done while having a joint account, but I think it's much easier considering the fact we are both doing well separately at the moment and I would see no need to change/mix things up.

Thoughts?

[breathemusic]

Why not have a combination? For people who get a paycheck mailed or picked up at work, you can always split your deposit and put money in various accounts. For those that have direct deposit, often you can have a main deposit with a set aside that can go to one or several accounts.

I would think that a married couple could easily set up a joint account where some of the shared and fairly stable bills like mortgage/rent, car payments, utilities, etc are spent out of. A couple could even discuss ahead of time how much each person would contribute per month into this account. Then the remainder of pay could go into separate accounts that were geared more toward personal spending and saving.

I'm not married, but I know that I'm the type of person who doesn't mind sharing things with someone who I feel is my partner... but I also like having some things that are just mine. Having a mix of joint and separate accounts would certainly allow for this. It's not like finances can't be adjusted every so often if need be.

[MonkeyMama]

Just another point of view. When we married, we were dedicated to live on only one of our incomes. {Or maybe just 10% of the second income, too}. If you can swing it, put one paycheck into the checking account and the other into a savings account. That is what we did. I totally agree on not looking at that new combined income as a license to spend more. It would be easy to do.

& I am not saying we never spent any of that money on anything, but it was pretty sweet to save it all first.

Likewise, what works for now, works for now, but you are going to want to think ahead to what if one of you loses a job, or if you have kids, etc. I think it is important to get out of the mine/yours mindset. Which is easier to be stuck in if you keep it "his and hers."

[green_goblin12]

My wife and I have 2 joint accounts. Her paycheck goes into one and is used for certain things (food, clothes, toys, other "wants" that tend to vary greatly) and my paycheck goes into one that is used only for bills, set up automatically for them all. Savings comes out of both (though different amounts.)

Plus, I don't balance "my" account, while she does hers. I think it would be a hassle to balance a checkbook of a joint account when you individually buy things all the time. Maybe not if you do a cash allowance or something, but we're adults and spend how we want and do so jointly for major purchases.

It works for us. Do what you think might work and if it doesn't you can always change things up.

[skydivingchic]

The person you need to be talking to about this is your girlfriend. Figure out what is going to work for you two, try it, and make adjustments as necessary. The majority of the responses you will get from the forum is that finances should be joint/shared after marriage, and not before. I am one of the few who doesn't like joint finances (for my situation, everyone is different). DBF and I have been together for 16 years now and are planning a wedding for next year. We've already discussed our financial plans and we won't be changing a thing in our handling of finances after we say our vows. Finances will stay separate.

A few words of caution. I think about any financial arrangement can work so long as you two are generally on the same page. If one of you is a big spender and another is a big saver, its likely not going to work out. Which leads me to my next point. Whether you intend on joint finances, or especially separate finances, I would recommend you spend some time figuring out what the law says. If you keep seperate finances, and your spouse runs up huge CC debt behind your back, you will still likely be liable for that in the event of divorce or death because the law basically makes finances joint after marriage. Laws vary by state, so figure out what your state's laws say.

Do a search on the forum about separate versus joint finances. There have been a number of threads over the years about this with lots of good information.

[skydivingchic]

Also, if you decide on separate finances, you really need to sit down to discuss things like:
- How will you handle it if one of you loses your job and can't find work for a long time?
- What will happen if one of you becomes disabled and can't work?
- What will happen if/when you decide to have kids? How will that change the financial picture?
- What if you have kids and one of you becomes a stay at home parent?
- How will retirement savings be handled? It will cause problems if one of you saves 20%+ of your income and the other saves nothing for retirement.
- How much debt is OK? What if one partner constantly has a car loan for a new luxury car and the other drives an old beater? Are you OK with that?
- How will you handle large income disparities?

These types of questions should be discussed between all couples, but especially those with separate finances.

[phantom]

To me the key in combining finances in a marriage is more in the state of mind than in the set up of accounts. I feel that the important thing is that both partners see all of the money that have as being "our" money rather than "your" money and "my" money. I don't think it matters if all of "our" money is in one account, two accounts, or ten accounts.

My husband and I both enjoy the act of moving money around, and we have found that the easiest way for us to share the responsibility of making sure bills actually get paid is to have separate accounts. He watches the cash flow of the account that his paychecks go into with Excel, and I watch the cash flow of the account that my paychecks go into with Gnu Cash. We budget together and plan major expenses together, but each of us takes a part of that plan to actually execute. I think one of us could easily take over the entire execution of the plan without either of us changing how we feel about the money, but we don't see the point. We have both of our names on all of our accounts, so the money really does belong to both of us, we just have different parts to manage.

I think that once you're married it will be important to convince your girlfriend to take pride whenever either of you moves money to savings. I almost never move money into our savings account, and my husband almost never makes and extra payment on our mortgage. But, I still take pride in seeing our savings go up, and he still takes pride in seeing the balance on our mortgage go down.

[snafu]

You've outlined your views on money management but I believe you need to compare and contrast these with GF's philosophies and method. Are you both netting similar sums with similar benefits? Are you both savers? Do either of you have a background in finance or investments? How do you each make spending decisions/criteria? What price point will require a joint decision on spending? Who will ultimately be responsible to ensure each and every expense is paid on time so that the little things don't fall through the cracks?

However many accounts, make sure they are low cost/low fee accounts. The banks are adding new fees for services that were included.

[Bades]

Great ideas/thoughts here.

My brother does a joint with his wife and they have their own separate accounts for their personal spending.

I can dig that idea.

I don't forsee any problems to be honest. We're living together now, we split food, rent, bills, and some entertainment. And we both have our own money for personal spending and fun. Which I think all of this works. We both save for retirement, and if we were to get married some plans would change such as me helping out with her student debt, and other big purchases, but other than that what we're doing now works out just fine. For the most part we are on the same page, which is great.

[LivingAlmostLarge]

I'm with MM and we're in the same age bracket. we've always been joint and always lived on one income for the most part. When both incomes were miniscule we used both we're talking $20k gross each in CA. But other than that we've just banked the second income and never worried.

It's mad for cheap living now and honestly probably for life. It just makes you realize that the second isn't necessary if you never live up to it. But that in and of itself is a different discussion.

[alirobertson]

I hope this article helps

This article helped me in some ways with my wife. I hope these tips can help you.

Shared vows, shared banks?

Majority of married couples share their money in joint accounts. While this is helpful to track all your finances, this commonly sparks dispute and misunderstanding for both parties. Having a “spender” and a “watchdog” in one of you will surely raise money issues.

What you need to do is have yours, mine and ours rule. You can have a joint bank account while having your personal ones. This will help you track your family budget without getting gritty on your personal expenses.

Dealing with debts

Do not play the blame game when it comes to debts. Most marriage ends in a sour note because of failure in dealing with their debts. Talk and decide on how you can pay it off together.

One of the options that couple takes is a prenuptial agreement. It makes sure that the asset of one before marriage will always be protected once brought into matrimony.

Tracking finance

Be keen in tracking your finances. Avoid buying unnecessary things or things that you don’t really need. Or if it’s unavoidable to spend, spend wisely. Although plasma TV is cheaper nowadays, try buying one during black Friday.

Another way to track your finances is through honesty. “How much was that laptop again?”, “Thanks for the dinner, how much did you spend for that?” and “Nice watch” are common scenes that couples encounter when asking about the costs of something that one bought.

Surprisingly, not all spouse answers honestly. Common answers on the questions above are “I got it with huge discount!”, “I have gift certificates!” and “It comes in multiple payment installments.”

Uh oh, someone will get hurt literally and figuratively once the truth is discovered. We all have dirty little secrets but please, avoid financial secrecy before it ends your marriage.

Emergency funds

Being healthy and fit doesn’t mean you don’t need health insurance. Unfortunate events happen not only to both of you but also to your family as well. Having a stash good for a couple of moths is a good strategy. Be ready with everything even with zombie apocalypse so whatever occurs, the only weapon that you have is readiness.

Investment opportunities

Have short-term and long-term goals. For now, you can invest on stocks, bonds, mutual funds, CDs and other investment option that will suit for the best of you. Education plan for your kids as well as saving for a retirement plan is a long-term goal that you can start at present.

In the long run, you will benefit from your investment. If you’re unsure with your wide options, you can always seek help from a broker or a financial expert such as Knightsbridge Advisors to help you determine the best way to deal with your portfolio.

Money really matters in marriage. Don’t always believe that when you’re hungry, love will keep you alive. It will make you happy but it will not make both of you alive. Grow old together while growing wise at the same time.

[witchkizzle]

Im 25 and my wife and I have 100% combined finances.

Thought I would chime in since I'm from OP's generation. Unfortunately I do belong to this 25 year old crowd, but I'm not like most of them. Actually, most of the decisions they make as a group are just mind boggling to me.

Having separate money for personal spending is like saying "I am going to share every bit of my life with you because I love you, except for this little bit here... this bit is mine and you are not allowed to be a part of it"

My wife doesn't care what I spend and I don't care what she spends, but we respect each other enough to not go blowing tons of money with out discussing it. I'm not going to beat her, for example, if she comes home and says she went out to lunch with work friends or went and bought a new outfit.

[wesman1299]

I want to start my reply by saying that everyone is different, every couple is different, and I understand my advice may not be the best for everyone. After all, this is your life, not mine!

What I would do is have separate accounts AND a joint account. The joint account will be used to pay joint expenditures (electricity, rent, etc.) You both will contribute a predetermined amount of money to the joint account each month, and you can even budget in a certain part of the 'payments' to this account to pay for dining and other entertainment expenses you incur as a couple. The individual accounts are where your paychecks will go to. Neither of you will be able to control each other's accounts, and you can spend as you please with your own money. You mentioned your significant other is good at managing money. Assuming you are too, you can reasonably assume there will be no issues with either of you making regular payments to the joint account. having the accounts split this way will keep fights from arising about money when either of you two indulge in an expense the other finds frivolous.

You also want to keep in mind the risk associated with having a joint account (especially before marriage). If there are issues between you two, you do not want either of you attempting to 'one up' the other by draining the bank account due to a fight. Having separate accounts keeps this from happening. Now I do not know either of you, and I assume that you both get along just fine, but I have seen this problem arise with younger couples I have known, and I tell peole all the time that neither of you should have access to each other's funds, in my opinion. Remember, YOU go to work to earn YOUR money, it should never be accesible by someone who did not earn this money.

Once again, these are my opinions, and I do not mean to offend anyone here with them.

[Eleanor]

I'm in a fairly similar situation, 23 and living with my boyfriend, although I don't see us getting married for several years, and I've been thinking about this as well. Right now we do something similar to you, we split groceries, rent, and utilities and if we go out together we pretty much always split the check. Everything else is for us to spend at our own discretion and we are not too keen on combining everything, partly because his money management habits stress me out and partly because we is very wary of combining something like finances.

I do like the idea of joint and separate accounts, although I'm not sure how much easier that would be than just splitting all of the bills like we are right now. I suppose we wouldn't have to write each other checks every month, so that would help.

[witchkizzle]

I may be more conservative on this topic, and I too do not intend to offend anyone. The divorce rate is so high, but it isn't a divorce problem... it's a marraige problem. Too many people end up marrying people they should never have married.

I agree with not combining finances before you are married. It is much easier to break up than it is (or should be) to get divorced. Then again, I wouldn't live with my girlfriend before we got married either.

If the person you are dating can't manage money (and you are concerned about it), don't marry them. It's pretty simple... Money is a huge issue in marriages.