Should We Combine Finances After Marriage

To Combine Finances Or Not After Marriage

When two people start their lives together, many conversations are had on how to intertwine their lives. But does this mean the finances of the couple should become one all the time? Back in the good old days, this was a given. If you get married, they issue you a joint banking account with your marriage license! Times certainly have changed, and this is no longer the default, or even the correct option for couples just starting out. The big question still remains. How do we decide how to handle our finances once we are married? We will touch on the most popular methods of handling money in relationships and the Pros and Cons of each.

Completely Combining Finances

If you have spoken with your future or current spouse and have decided that combining finances will be best for your relationship, suit up and take the plunge! In some aspects, this is the easiest path forward, and leads to the fewest fights, issuers, and hidden money issues that the other options allow. Some of the pros and cons are below:

• Pros
• Simple
• Full transparency
• No surprises
• Committing completely to the relationship
• Both parties are fully invested and aware
• Cons
• Feeling of being watched and judged
• Liabilities are forever combined
• Income imbalance becomes acutely aware
• Why should we both contribute everything to the same account and pay even shares of bills in our incomes are not aligned?

Partially Combine Finances

The most common option by far is combine the majority of the finances while leaving some ambiguity in the relationship. The partial combine option allows the couple the total flexibility to define the type of accounts and the relationship interaction over money. Typically this involves one joint account for the shared expenses, and personal accounts for each spouse.

• Pros
• Find the right balance over combined and separate accounts
• This model is becoming more popular as couples contribute to a shared account for all household spending, investing, retirement, etc but have separate spending accounts for personal spending
• Kind of like an allowance, this can either directly go to the separate accounts or pass through the combined account for transparency
• This aligns the interest and future of the household while providing each spouse the freedom to spend a pre-agreed amount without feeling watched or judged
• Shared success when saving towards common goals
• Cons
• Sometimes harder to track if you are looking at combined net worth/budgeting/planning/etc
• Harder to agree upfront on the amount each spouse gets in their personal accounts?
• Spending imbalance can cause strife as one spouse makes $100k, and one makes $20k
• Do they get the same amount of spending money?

Completely Separate Accounts

The complete separation of church and state. Why in the world would this ever make sense? Never talk to your spouse about money? Never combine? How could that ever work?

I will tell you how couples in this paradigm make it work. The 100% separate route is EXTREMELY common with the new generation and to be honest, when there is significant income discrepancy, this method allows for the most optimum deployment of resources, however it does not consider the entire family impact the majority of the time. If all members of the relationship search out their full desires, how can the relationship continue? 100% separate relationships are entirely supportable and recommended in certain scenarios where both parties in the relationship are fully employed, have fully funded roles and retirement accounts, and are looking to align expectations from today and in the future. The completely separate couple works in legitimate scenarios, and when appropriate the separate but equal relationship is the best possible option.

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• 100% Separate
• Pros
• Ongoing lawsuits (For the other spouse either known or not)
• Massive debt imbalance
• Dual working couple who have totally different spending habits
• Autonomy
• Helps even out income imbalances when discussed upfront.  For instance the higher earning couple contributing a higher percentage to shared bills
• Cons
• Can lead to surprises
• Fights over who pays for what on a daily basis
• Easier to hide money from spouse and leave
• People who manage money separately from their partner are 5 times more likely to leave their partner due to money issues
• Who buys groceries?
• Who pays for a quick trip out to CVS, it becomes a daily question and decision point