Here’s Exactly How to Combine Finances After Marriage

Source: Sự Minh | Pexels
Source: Sự Minh | Pexels

Marriage is so much more than a piece of paper. It’s a lifelong commitment to your relationship, partner, and the life you share together. But sharing your life together can also mean sharing your bank accounts and money—which can create a whole slew of problems if you’re not careful. Case in point? Money is the second leading cause of divorce

That said, while this statistic can be frightening, it doesn’t have to scare you off. In fact, learning how to communicate, handle, share, and trust each other with money can drastically reduce your chances of getting divorced. So, let’s talk about combining finances after marriage.


Combining Finances After Marriage

Despite the fact that not combining your finances after marriage was considered a bad omen in the ’70s and ’80s, a staggering number of modern-day couples are opting to keep their finances separate. According to Bankrate, just 43% of committed couples living together have joint accounts. Similarly, 37% of married millennials and half of Gen Z maintain separate bank accounts from their partner.

In truth, these numbers aren’t that shocking. After all, we’re constantly challenging gender rules and norms. However, there’s something to be said about couples combining their money. Case in point? A study at Cornell University found that married couples who combine finances tend to be happier and last longer than those without a shared account and that the pros of combining finances outweigh the cons.


Should You Combine Finances After Marriage?

1. There’s more accountability

There’s no hiding your spending habits when you share a savings account with your spouse; they can see every transaction and vice versa. While this may sound like extra, unnecessary pressure, it’s actually anything but. In truth, being accountable to someone else makes it easier to manage your money. You’re less likely to make impulse purchases that don’t align with your financial goals and get better at budgeting. Likewise, it’s also a team effort, so you can help each other stay on track.

Additionally, sharing finances with your partner makes it harder to lie about money. Nearly 1 in 4 Americans have kept or are keeping a financial secret from their partner. While financial infidelity can be a slippery slope, creating a joint bank account can help normalize the topic of finances and make it easier to talk about money issues.


2. It can improve your credit score

While marriage won’t directly impact your individual credit score, co-signing on loans with your spouse can. This can be especially helpful if one person has solid money habits but is working on building their credit score back up; they can piggyback off their spouse’s score and improve their own by becoming an “authorized user” on their partner’s credit card.


3. It promotes equality and teamwork

Most couples don’t bring in the same amount of income, and that’s OK! This is where the beauty of sharing a bank account truly shines. It makes both partners feel like it’s “their” money regardless of where it came from, which can be so beneficial. Whoever’s earning less is less likely to feel like they aren’t pulling their weight. By the same token, marriage is a partnership, and sharing finances with one another also promotes teamwork in every sense of the word.


How To Combine Finances After Marriage

1. Normalize money

If you and your partner choose to combine finances, the first thing you should do is normalize talking about money. Money is a taboo and emotionally charged subject for a lot of people, but getting used to talking about it with your partner is going to help remove this stigma. Plus, being able to openly discuss finances is one of the biggest signs of a healthy marriage.

To start, fiduciary financial advisor Kara Smith suggests discussing your personal financial experiences. “As a couple, you can then reflect on how those experiences relate to how you value money along with your spending philosophy,” she told me. “If you’re feeling nervous about having the money talk, remember that you are becoming a team in every way, and finances are an important part of that.” Of course, being open, honest, and understanding is key here.


2. Discuss your current financial statuses

It’s also important to discuss your current financial statuses so you both have a rough idea of what your combined money will look like moving forward. Sit down and list your total combined income, expenses, and any joint debt you may have taken on for past endeavors, like your wedding. The amount you have left over after paying for these expenses will be what you have to spend.

Although debt incurred before your marriage (like student loans) won’t transfer over to your spouse afterward and vice versa, it’s still a good idea to discuss any outstanding debt either one of you owes individually. Paying down debt is something that shouldn’t be neglected, and talking about what you have to pay off will give you both a better idea of what you’re working with.


3. Figure out your financial goals

Talk about what you both want for the future—whether it’s kids, a house, traveling, living debt-free, etc. Then, break up your financial goals into short, medium, and long-term ones. Short-term goals typically take one to two years to achieve and can include things like building an emergency fund and paying off credit card debt, whereas medium-term goals can take up to 10 years to accomplish and include saving for a down payment on a home, paying off student loans, etc. Long-term goals center around retirement planning and take 40+ years to achieve.

To make breaking down your goals easier, try using the S.M.A.R.T acronym, which stands for Specific, Measurable, Achievable, Realistic, and Time-based.

How To Use the S.M.A.R.T Acronym for Financial Goal-Setting:

  • State your goal in a few words and be specific: “We want to buy a house.”
  • Measure how much it’ll cost to achieve that goal: “How much do we need to save?”
  • Ascertain if the goal is achievable: “Can we save this much given our current financial status?”
  • Reassess and determine if the goal’s realistic: “Even if we can save this much, how tight will our finances be, and how will our day-to-day spending be impacted?”
  • The time it’ll take to reach: “How long will it take to reach this goal?”

Answering these kinds of questions about money may be difficult, but it’s vital. It’ll help you create a solid spending plan for your marriage.


4. Create a budget together

Look at the money you have left over each month after paying for expenses. This is what you’ll divvy up to contribute to your financial goals, retirement plan, and savings. Following the 50/30/20 rule of thumb—which allocates 50% of your income for expenses, 30% for spending, and 20% for savings and debt payments—can be a great place to start. Of course, you may have to tweak these percentages if you want to aggressively save or pay off debt. For example, you might contribute 35% of your income into savings and student loans and only allow 15% for spending. Likewise, you can also try cutting back and saving more by canceling subscriptions or making meals at home.

Additionally, it’s also important to keep track of your spending. You can use a budgeting template or apps like Goodbudget, Mint, or YNAB to do this. Also, you’ll want to have regular budget check-ins as well. This will give you and your spouse the chance to discuss your financial plan, whether any adjustments need to be made, and track your progress.


5. Open a joint account and determine who pays for what

Some couples opt to put all of their money in a joint checking and savings account, while others may opt to have a joint account for things like household bills and keep their own respective checking accounts for individual expenses. Likewise, couples who want to spend their golden years jet-setting around the globe might open a joint retirement account as well. There really is no right or wrong here. All that matters is that you do whatever makes the most sense for you and your marriage.

That said, if you choose to keep joint and individual accounts, it’s important to discuss how much each of you can realistically afford to contribute to it each month—you don’t have to split everything 50/50. Whoever’s paying more will likely contribute more to balance things out. Likewise, be sure to discuss who’s going to be in charge of managing the bills, paying shared credit cards on time, and so on.

If you’re having difficulty combining your finances, consider enlisting the help of a  financial therapist or advisor to guide you through the process. At the end of the day, money stress doesn’t deserve a spot in your marriage.