When my wife and I were first married the prospect of combining our finances was daunting. Are we supposed to share all of our accounts and assets from now on? The traditionalists in our families think so, but is that really the only acceptable way to merge your finances when you get married?
My wife and I were both independent and self-reliant (though she might argue whether I was truly “self-reliant”) well before we got married. We have separate incomes, expenses, obligations and financial goals. Not to mention our own distinct control issues. So simply throwing our nest-eggs into the same basket felt somewhat unnatural.
So we considered our options, and there really aren’t very many. Here are 3 ways that you can merge your finances when you get married, along with the pros and cons of each plan and what route we ultimately decided to take.
1. The “What’s Mine is Yours” Plan
Sharing all marital assets and expenses can definitely instill trust, equality and unity in a marriage. This idea appears to be the result of the single-breadwinner family model, which is becoming less prevalent with each generation. Today, with more women as equal breadwinners and entering marriages with a myriad of accounts, assets and debts, it no longer goes without saying that you should automatically merge your finances when you get married.
- Merging your finances demonstrates commitment, equality and unity.
- Accounting is simple as all expenses are paid through joint accounts.
- You can avoid criticism from the traditionalists in your family.
- You earn double credit card points.
- You might feel like you don’t have your own money to spend.
- You may argue over your spouse’s personal spending habits.
- You have less ability to protect yourself in a worst case scenario, such as if your spouse decides to leave and empties the joint accounts (which has happened to at least a few of my clients).
2. The “What’s Mine is Mine” Plan
Having totally separate accounts is another option and it’s not nearly as selfish as it sounds. The common perception seems to be that having separate accounts is not “appropriate” for a marriage where equality and trust are key.
However, it can also be argued that sharing money is often a source of unending contention in modern marriages. Before we were married my wife and I each had separate bank accounts, credit cards and and bills. For any shared expenses we used an accounting spreadsheet.
- Your money is yours to spend, after shared expenses are met.
- You can prioritize your personal savings easier.
- If you have premarital debt (such as tax debt), having separate accounts (and taxes) will make it easier to figure out your repayment amount.
- You may feel like two separate individuals, rather than a team.
- Accounting can become highly complex.
- Your family might think you’re weird.
3. The “What’s Ours is Ours” Plan
Having separate accounts was working well for me. We initially had few arguments about money because we both paid our share of the bills on time. At some point though, we decided to simplify our accounting. Sending separate rent checks was starting to feel odd and our accounting sheet was starting to get ridiculously complex. Getting a joint credit card and joint bank accounts provided some excellent perks.
- This plan provides the best of both worlds in marital finances;
- You have the freedom to save and spend money on personal purchases when you want to.
- You experience the trust and security that comes with a joint account for large, shared expenses.
- You still have to maintain an accounting spreadsheet if you use a joint card for all purchases- such as when you are trying to earn the maximum amount of credit card loyalty points.
- You have more accounts to monitor and track.
The combination of shared accounts and personal accounts has worked well for me and my wife. It’s still sometimes a chore to keep our accounting spreadsheet up-to-date and accurate but the benefits definitely outweigh the negatives for us. We now have a joint credit card to max out our point earnings, a joint savings account for our house-fund and a joint checking account for food, rent, insurance and other big ticket shared expenses.
How did you and your spouse handle the merging of your finances?