Combining Finances as a Newly Married Couple

Reviewed by Doretha ClemonFact checked by Melody KazelReviewed by Doretha ClemonFact checked by Melody Kazel

Combining finances as a newly married couple often involves trial and error to determine what works best for you. It’s important to talk through how you’ll manage bank accounts, daily spending, budgeting, and more—ideally before walking down the aisle.  

While these conversations can be challenging, establishing a financial plan early is essential. After all, getting married makes financial sense. Couples typically manage their finances in one of three ways: separately, jointly, or through a combination of both. Each approach has its pros and cons.

Key Takeaways

• Honesty about money is essential for trust in a marriage.
• Couples can manage their money with separate accounts, a joint account, or a combination of the two.
• Separate accounts help avoid arguments but require more planning, and you may miss the benefits of shared finances.
• A joint account makes budgeting simplest but can lead to more conflicts if partners’ spending habits don’t mesh.
• Combining a joint account with an individual checking account for each spouse lets you track expenses and creates fewer money conflicts.

Money can be one of the most difficult topics for couples. But no matter how uncomfortable it feels, two important words to remember about marriage and money are: Never lie. Just as honesty is crucial to any relationship’s success, honesty is essential to discussions about money. Lying about finances to a spouse damages trust and can potentially lead to divorce.

How to Combine Finances After Marriage

Discuss current accounts

During your first conversation, bring all your current accounts, including debts and assets like retirement accounts, cars, or homes. 

Assess individual habits and check credit score

If you don’t have a budget yet, take this opportunity to individually review your expenses and categorize them into needs, wants, and savings. This will give you a better picture of your financial habits. Take this moment to check your credit score as well. You can obtain a free copy on annualcreditreport.com. Some credit cards also provide free FICO scores to their cardholders.

Set goals as a couple

Once you’ve both evaluated your current spending habits, discuss how to improve them to achieve your financial goals. If you haven’t already made a list of those, stop and make a list of financial goals as a married couple. Consider things like buying a home, bucket list travel, or investing. Based on those goals, decide how you’d like to budget moving forward– separately, jointly, or a combination of both. 

Managing Money as a Newly Married Couple

Separate accounts

Keeping separate accounts may be a comfortable starting point for many couples, especially if they’re used to managing their own finances. A separate accounting system can help clarify income disparities, debts, and potential spender-versus-saver personality conflicts.

However, separate accounts require more communication about who pays for what. Some couples split expenses equally, while others may prefer paying proportionately based on their income. Using a shared budgeting spreadsheet or a joint credit card can help track spending.

• Pros: Each person is responsible for their own spending habits and paying off any debts brought into the marriage. This money management method is often seen as fair, and you may be less likely to argue over your spouse’s spending habits.
• Cons: Tracking who owes what becomes a lot of work each month, especially if career changes occur or children enter the picture. If each partner saves for retirement based on based on individual income, you also may not be optimizing shared investments.

Joint accounts

Managing finances with a joint account can simplify things for couples. With all family expenses paid from one account, tracking spending becomes easier, whether through a planner, a custom budgeting spreadsheet, or a budgeting app.

• Pros: It’s easier to track budgeting and spending, there is no monthly division of resources, and this method adapts as family needs change and grow.
• Cons: Different spending habits can lead to resentment, especially if one partner earns more than the other. It also may be hard to keep surprise gifts a secret.

Combination of separate and joint accounts

A hybrid approach of separate and joint accounts can offer a balance. With this method, all income goes into a joint account for shared expenses, while each partner has a personal account with a set monthly transfer. All savings, debt, and retirement are managed jointly. 

This “personal fund” allowed for independent purchases without judgment from either party. The amount transferred to personal accounts needs to be discussed and agreed upon to avoid conflict.

• Pros: This method combines the ease of joint accounts with personal freedom. You don’t have to deal with income disparities when paying the bills, while still having the freedom to buy what you want without discussing it with your significant other. Bonus, you work together toward joint goals and retirement.
• Cons: This method requires managing multiple bank accounts. Having an amount deposited into your personal account each month may feel like an allowance, which might rub some people the wrong way.

Money Tips for All Couples

Regardless of how you choose to manage your money, consider the following:

• Every household has to decide who pays for what. However, unlike previous experiences with roommates, you probably won’t want to keep pantry items separate in your marriage. You also have a vested interest in paying bills on time to preserve your credit.
• While it’s not the most romantic part of moving in together, newlyweds need to discuss household logistics—who pays which bill, reimbursements, and how you’ll work toward shared goals. Plan regular discussions to ensure you both agree on your financial strategy.

Important

A spouse isn’t just a roommate; you need to figure out logistics and plan as a family for shared goals and an excellent credit rating.

• Automate bill payments to avoid late fees and reduce stress. Regularly check in on your finances for continued transparency. If you’re using a budget spreadsheet or a budgeting app, set aside time on a weekly basis to update spending. 
• Newlyweds should also discuss retirement and long-term goals, such as buying a house or taking a dream vacation. If possible, both spouses should contribute to retirement accounts and set up automated savings for future needs.

What is the 50/30/20 Rule?

The 50/30/20 budget rule is an approach to budgeting that divides your after-tax income into three spending categories: 50% for needs, 30% for wants, and 20% for savings. Needs are defined as bills necessary for survival, such as rent or mortgage payments, groceries, utilities, and car payments. Wants cover discretionary spending such as eating out, a gym membership, or tickets to concerts. As a married couple, you may decide to ascribe to the 50/30/20 budget rule as a way to allocate your earnings.

How Do Second Marriages Handle Finances?

If one or both partners have been married before, finances can be more complex. One (or both) partners may have past experiences with money mismanagement or have financial obligations related to a former spouse or children from a previous marriage. You may want a prenuptial or financial agreement to outline how money will be managed to avoid repeating past mistakes. It’s important to honestly disclose all of your assets, obligations, and debts to ensure that your relationship is built on openness and trust. If one or both spouses have children from previous relationships, it may be simpler to keep your finances separate. Depending on the complexity of the situation, consider contacting an estate planning attorney to discuss these matters.

What Is Financial Infidelity in a Marriage?

Financial infidelity occurs when a couple who has chosen to combine their finances lies to each other about money. Examples include hiding existing debt, making large purchases without disclosure, or lying about spending habits. It can cause a rift between partners that can be difficult to fix. Coming clean and consulting a counselor to discuss the issue can help rectify it. Having a shared budget can also rebuild trust.

The Bottom Line

There is no one-size-fits-all approach to managing finances as a new couple. With communication, trust, and planning, you and your spouse can have a marriage free of conflicts about money. If you’re struggling to come up with a joint plan that works, seek the professional advice of a financial counselor.

Read the original article on Investopedia.