Learning how to consolidate finances with a partner can be a tricky subject for many couples. It requires open communication, trust, and a solid plan to make sure both parties are on the same page. Money matters can often be a source of tension in relationships, but learning how to navigate them together can lead to a stronger and more secure partnership.
In this article, we will explore some of the best ways to combine finances after marriage, from setting financial goals to creating a budget and dealing with any unexpected financial challenges that may arise. Whether you’re just starting out in your relationship or have been together for years, this guide will provide you with the tools you need to create a successful financial partnership.
Why Should You Consider Combining Finances with Your Spouse?
Combining finances with your spouse can have several benefits, including:
Better Financial Management
Consolidating finances can make it easier to manage your money as a couple, especially if you have joint expenses like rent or mortgage payments, bills, and groceries. By having all of your money in one place, it can be easier to track your spending, create a budget, and save for your future financial goals.
Improved Communication
According to a study by SunTrust Bank, financial stress is the leading cause of stress in relationships, with 35% of respondents reporting that money is the primary cause of stress in their relationship.
Additionally, a study by the National Center for Biotechnology Information found that couples who reported financial disagreements in their first two years of marriage were more likely to divorce than couples who did not report financial disagreements.
Consolidating finances requires open and honest communication about your financial situation and goals. This can help build trust and strengthen your relationship.
Increased Financial Security
Combining finances can also help increase your financial security as a couple. For example, having joint accounts can provide access to emergency funds or insurance policies that you may not have had otherwise.
Better Credit Scores
If one spouse has a stronger credit score than the other, combining finances can help improve the weaker score by building credit history together. This can help when applying for loans, credit cards, or other financial products in the future.
Strengthened Partnership
Combining finances can help create a sense of partnership and joint responsibility in your relationship. This can foster a sense of teamwork and a shared vision for your future.
Ultimately, whether or not to combine finances with your spouse is a personal decision that depends on your individual financial situations and goals. However, for many couples, combining finances can be a smart way to manage money. It can also help build a stronger financial future together.
How To Combine Finances After Marriage:
Combining finances with your significant other can be a big decision, but it can also help build trust and strengthen your relationship. Here are some steps you can follow to combine finances:
Have An Open And Honest Conversation
Sit down with your partner and discuss your financial goals, values, and concerns. Be transparent about your income, debts, and expenses. It’s important to establish clear communication and ensure that both of you are on the same page. You want to enter marriage with a solid understanding about your finances and goals.
Create A Budget
Work together to create a budget that includes all of your expenses and income. This will help you track your spending and make sure that you’re both contributing to the household. Make sure to include savings goals if you plan on making a large purchase together. You want to ensure you each will be able to share in the expense when you have enough saved.
Don’t know how to set up a budget? Read my post on Budgeting 101 and download my FREE Budget Blueprint to get a jump start on your budget!
Decide How To Split Expenses
Decide how you will split expenses such as rent/mortgage, utilities, groceries, and other bills.
You could split the costs evenly, contribute based on your respective incomes, or divide the expenses based on who uses them more.
You could decide to split some of the joint expenses equally and keep the rest of your income separate. That way you can pay for your own debts separately like auto or student loans.
You can keep some money on the side for things you want to buy without having to ask your partner. This could be a set amount each month like $300-500 for “discretionary” spending.
Consider Opening A Joint Account
A joint account can help you streamline your finances and make it easier to manage your bills and expenses. You could contribute a set amount each month or each pay period to cover your joint expenses. This could be rent/mortgage, utilities, and groceries.
Example: The way my husband and I operate is we made a list of all the expenses we would split on a joint debit/credit card. These costs include our mortgage, groceries, insurance, eating out, utilities, and some other miscellaneous expenses.
We budgeted how much that would be each month, and each transfer half of the total cost to our joint account each month. Then our debit/credit card is paid off through that account.
If the joint account starts getting low, we adjust the budget (thanks, inflation) and consider cutting costs or increasing contributions. This may not work for everyone, but it has made sharing expenses much easier than using venmo every time we need to pay each other back.
Set Financial Goals
Discuss your financial goals as a couple and make a plan to achieve them together. This could include saving for a down payment on a house, paying off debt, saving for a vacation, or investing in retirement accounts.
If you plan on having children, you should plan a budget around the costs involved. Make it a priority early on so you can manage the expense of children and childcare later on. If one of you wants to be a stay at home parent someday, you should be upfront with your partner and create a budget around one income. That way you could plan on spending a little less on a smaller home and be able to afford living on one income or affording daycare with less of a financial burden.
Keep Each Other Accountable
Make sure you both are sticking to the budget and contributing to your joint expenses. Regularly review your budget together and make adjustments as necessary.
You may realize you are spending more on eating out (I’m guilty!) than you budgeted for. Then you may either need to cut spending in another category or make it a priority to meal prep more often so you are less tempted to eat out often.
Have these discussions on a regular basis so it becomes a habit. You also review your savings goals every month and see how much closer you are to achieving it. It feels good to watch your debt go down and savings go up every month.
Remember, combining finances with your significant other is a personal decision, and it’s important to do what works best for your relationship. Open communication and trust are key to making it work.
What Are Obstacles When Trying to Consolidate Finances with Your Partner?
Combining finances with a partner can be a challenging process. Here are some common obstacles that can arise:
Different Financial Values
Each partner may have a different approach to money management, which can lead to disagreements about how to spend, save, and invest. For instance, one spouse may want to pay off debt while the other may want to max out retirement accounts or buy collector cars.
Unequal Incomes
If one partner earns significantly more than the other, it can be difficult to decide how to split expenses and contributions. It may make sense to contribute based on a percentage of income.
For example, if spouse 1 makes $100,000 and spouse 2 makes $50,000, spouse 1 can contribute ⅔, or 67%, the expense (100,000/(100,000+50,000)) instead of 50%.
Existing Debt
If one or both partners have significant debt, it can create added stress and complexity when trying to combine finances. You may decide it’s fair for the spouse with debt to pay their own.
Or you could create a plan to tackle the debt together. In the case of credit card debt with a high interest rate like 10% or more, it could be worthwhile to work on bringing that balance down together as quickly as possible.
Fear of Losing Financial Independence
Some individuals may be hesitant to merge their finances with their partner because they feel it could jeopardize their financial autonomy.
Remember, you don’t have to combine all of your income in a joint account. You can split expenses and keep any remaining income in separate personal accounts. That way you can have some spending money of your own (like a weekly Starbucks coffee fund) without feeling guilty.
Lack of Trust
Trust is a crucial component of any successful relationship, and it can be challenging to build trust around financial matters, particularly if one partner has made mistakes or has been dishonest in the past.
Open and honest communication are key to building trust. Consider speaking with a couple’s counselor or financial planner if this is something you struggle with in your relationship.
Family or Cultural Expectations
Family or cultural expectations can play a role in how couples approach finances. For example, some cultures may expect the man to be the primary breadwinner, while others may emphasize the importance of individual financial autonomy. There is no one size fits all approach when it comes to finances. Just because your parents combined their accounts, does not mean you have to approach things the same way.
Example: My parents combined accounts and both worked while my brother and I went to daycare. I have been able to work at home while taking care of my toddler the last 2 years.
However, my company is requiring us to come back into the office so now my husband and I have only a few months to come to a decision around my work arrangement. While my husband and I both enjoy the extra income I bring, we both are hesitant about putting our kids in daycare due to cost, inflexibility, and the illnesses that come with it. Not to mention the 6+ months long waitlists!
It’s important to address these obstacles head-on and have open and honest communication with your partner about your concerns and expectations. Seek the advice of a financial advisor or couples counselor if needed, to help navigate the challenges and find a solution that works for both of you.
How Often Should Spouses Talk About Money?
There is no one-size-fits-all answer to how often spouses should talk about money. The frequency of these conversations will depend on each couple’s individual financial situation, goals, and communication style. Here are some general guidelines to consider:
Regular Check-ins
It’s a good idea to have regular check-ins about your finances, whether that’s weekly, monthly, or quarterly. During these check-ins, you can review your budget, discuss any upcoming expenses, and make sure you’re on track with your financial goals.
Major Life Changes
Major life changes, such as buying a house, having a baby, or changing jobs, can have a significant impact on your finances. It’s important to have open and honest conversations about how these changes will affect your budget and financial goals.
When Disagreements Arise
It’s common for couples to have disagreements about money from time to time. When this happens, it’s important to address the issue and find a solution that works for both of you. Avoiding these conversations can lead to resentment and conflict in the long run.
Annual Reviews
It can be helpful to have an annual review of your finances to evaluate your progress toward your financial goals and make any necessary adjustments. My husband and I tend to have an annual review during tax season since we are looking at YTD (year-to-date) financial data.
Ultimately, the frequency of conversations about money will depend on each couple’s unique situation. The most important thing is to have open and honest communication about your finances and work together to achieve your financial goals.
Final Thoughts
Combining finances after marriage can be a tricky process, but communication and compromise are key. Set goals and create a budget together. Consider merging accounts or maintaining separate ones. Remember to revisit and adjust your financial plan as needed. Ultimately, open and honest communication is the foundation for a successful financial future together.
Have you combined finances with your spouse?
