Years ago, merging finances after marriage wasn’t something people had to put much thought into. It was assumed that a new husband and wife would open joint bank accounts, get a mortgage in both names, and share credit cards together.
Now, the issue is a little more complicated. It’s more likely that both people will work and have their own sources of income.
If you get married when you are older, you are likely already financially established and merging your finances might seem like too much trouble.
If you’re wondering if you should blend your finances or leave things as they stand, the answer is that there’s no single answer.
Different solutions will work best for different couples. It all depends on where you and your new spouse are financially, how much you trust each other, and how well your spending and saving habits blend.
Trust is Essential
Trust is a big issue when it comes to merging finances after marriage. While choosing not to blend your bank accounts doesn’t mean you don’t trust your partner, taking the step and opening joint accounts means that you do.
Before you think about marriage, one of the big questions to ask yourself is how much do you trust your partner to manage money wisely?
If you don’t at all or if you worry that your partner will spend you both into a load of debt, you might want to take a step back from the entire project.
Should We Create a Joint Bank Account?
There is a level of convenience that comes with opening joint bank accounts. When both of you put your money in the same place each month, the question of who will pay for what disappears.
Every household bill can be paid from the same account and you won’t have to worry about splitting the cost of groceries or utilities.
For some people, sharing a bank account makes them feel like they are actually married and not simply two people living as housemates.
But, sharing accounts opens a few cans of worms. If one of you makes more than the other, sharing everything can seem a bit unfair.
The same is true if one of you got yourself into a lot of debt before marriage. The other partner might feel a little resentful about having to chip in to pay down your debt.
Should We Share Some But Not All Finances?
Another option for newlyweds is to open joint savings and checking accounts, but also keep separate bank accounts.
You can pay common bills and save money for goals for the two of you, such as a down payment on a house, from the joint accounts.
Use the separate accounts for your individual wants, without commentary from the other person. For example, if one of you enjoys spending money on clothing, you can use the money from your personal account for that.
Not fully merging your finances is a convenient option, especially if your financial habits differ slightly. It lets you see eye to eye when it comes to shared expenses and savings goals, but also gives you a bit of freedom financially.
The halfway solution also presents some challenges, though, particularly for couples with unequal incomes. You’ll need to work out how much each person needs to contribute to the joint accounts.
For example, will the higher earner contribute more per month to the joint account or will each person’s contribution be equal?
The solution you arrive at needs to feel fair to both of you.
Should We Keep Finances Completely Separate?
Some people think that keeping your finances separate after marriage is a bad sign. But others don’t see it as an issue at all.
Depending on how established you are in your finances, keeping things separate can be the easiest solution.
If you have been with a bank for decades and have a considerable amount saved, would it be a big hassle to move that money to a new account?
If you have several established credit cards, you might not want to open yet another one in both of your names.
Keeping things separate raises issues when it comes time to pay your joint bills. You’ll need to decide who is responsible for which bills.
You can split the bills equally by amounts, but then one of you needs to go after the other for money each month.
You could also divide the bills by type. For example, you could take care of the cable bill and the water bill while your spouse handles the gas and electric bills.
Making the Decision
Disagreements about money lead to divorce in a lot of cases. If you and your partner take the time to openly discuss your finances and how you’d like to handle them after you wed, you can avoid any huge money blow-ups down the line.
Merging finances after marriage isn’t a decision to take lightly, so talk to your partner and come up with a plan that works for the both of you.
You might also consider sitting down with a professional marriage counselor to help you make the right decision, especially if your early money discussions become heated.
Kelly Anderson is a financial planner who blogs about financial advice you can use in your everyday life. Connect with her on Twitter, Facebook and Google+.