Updated: Nov 20
All couples combine finances in some way or another before or after marriage, but there are many methods, strategies, and considerations that are important to understand before thinking about your options. All the more, simply searching for the best method for combining can seem daunting as there is a plethora of information out there to consider. In general, couples who combine finances tend to be happier and have more open lines of communication. Below I’ve included some mental and technical considerations that are often overlooked when deciding how and when to combine.
Addressing Money Habits and Preconceived Notions
You and your significant other both have different money habits based on how you were raised and your first memories with money. The amount of wealth and perception of finances matter greatly and should always be the first financial item you address before tying the knot. For example, a sense of scarcity caused by being raised under a tight household budget or growing up with little money for one spouse and a sense of prosperity for another can create a tricky dynamic. Family openness around discussing finances also comes into play. If one partner feels money is a taboo topic, this needs to be addressed before proceeding with any actual money talk. This conversation should be had with an open mind from both parties with a common goal of hoping to understand each other’s thoughts and feelings surrounding money.
Conducting Monthly Money Meetings
A monthly money meeting is when you and your fiancé/spouse sit down and discuss what money came in that month, how it should be or was allocated, and to check in on your individual and combined goals. This is important to start prior to marriage to ensure you are both on the same page, and keeps an open line of communication between you and your spouse. You may even choose to bring your kids into these meetings, in the future, in order to teach them the importance of openly discussing money.
Keeping Open Lines of Communication
Talking about money is hard, and in no circumstances should it be assumed that you will agree on 100% of money decisions. Knowing this, maintaining consistent communication can be tough whenever there is a disagreement on a big expenditure, trip, or even how much to spend on going out. Remember that you each come from different upbringings, so your ideas about and habits with money will likely vary and need to be worked through. Consider a unified balance where both people in a relationship can spend money on what they enjoy, save for what they believe is important.
Reducing the Number of Outstanding Accounts/Complexity
After addressing the above items, moving towards taking actionable steps to efficiently manage finances together is the next item. Upon getting married, one of the first to-dos is to reduce the amount of outstanding accounts, and consolidate when need be. Start by listing all outstanding accounts. This includes credit cards, bank accounts, investment accounts,etc.
A common setup on the banking side would be to have a joint checking, savings, and perhaps individual checking accounts within the same financial institution that can be used for individual discretionary spending, but still discussed during your monthly money meeting. As far as investment accounts go, it is usually advisable to discuss with a financial planner as the best route in that case is usually unique to the couple.
Splitting Transactions Between Debit/Credit
As you are discussing combining finances, utilizing a debit and credit card is one consideration not to ignore. Ultimately, simplicity is the best approach and cutting back to 1-2 credit cards apiece can help create a better sense of control over your joint finances and cause less confusion when you conduct your monthly meeting. Often times I see couples utilize credit cards for a specific type of purchase such as travel, or discretionary spending broadly, and use debit/ACH for other expenses like mortgage, utilities, and other fixed items.
Create a Marital Budget
Creating a budget can be a good starting point for couples who want to create a consistent spending plan they both can follow. You can find a template here. Consider working with a financial planner to assist you with additional documents such as an income statement and balance sheet.
There are many other considerations and nuances to consider when having discussions with your significant other such as addressing vulnerabilities, setbacks, and past mistakes. As mentioned above, it is important to consider not just the technical aspects of finances but the psychological barriers as well. NFP prioritizes behavioral finance aspects before teaching individuals the ins and outs of putting together a combined budget and encourages those looking to combine finances for the first time to consult with a financial planner who will address these needs in a transparent manner.