How to Combine Your Finances After Marriage

Kate Robinson
Greater Nevada Credit Union

Since we talked about weddings last week, let’s look this week at one of the most important topics a newly married couple will have to wrestle with – managing the finances together. If you’ve been single for a while, the reality of suddenly having to make mutual earning, spending and saving decisions can be a bit difficult to overcome. We’re going to look at different methods couples use to manage their finances, and tips for making that transition successfully.

Managing Finances as a Couple We’re all one family: I’ve heard this method referred to as “complete co-mingling” but that term sounds like some sort of technique for managing the social habits of animals in a wildlife refuge, so I’m just going to call it the “combined” method. Couples who use this format adopt the idea that after marriage, all assets belong to the couple, not the individual, regardless of whose income is the highest. They combine checking and savings accounts, debit and credit cards, and manage all their bills from that one resource pool. This can be difficult to adapt to at first, if both members of the couple are used to being independent. Some things to watch out for are:

  • If you’re the primary breadwinner, be careful not to become resentful when your spouse spends money. If you’ve agreed that you both own everything, make sure you mean it.
  • If you’re not the primary bread winner, try not to feel guilty for spending your spouse’s money. If you’ve agreed that you both own everything, make sure you mean it.
  • Be careful about mentally assigning a salary-based value to each partner’s work in the relationship. Some pretty valuable work doesn’t come with a paycheck (raising children, for example).
  • If one of you is naturally a spender, and the other naturally a saver, tension can arise when decisions have to be made. In this case, try to learn how to play to each other’s strengths, rather than resent each other’s weaknesses. For instance, recommends making it a goal to make a better decision as a couple than either of you would as an individual. A great way to ease any tension related to spending habits is to allocate a discretionary fund for each partner in the budget, so both of you have a little “fun” money to spend how you wish.

The Roommate Method: Couples who don’t choose to completely combine their finances, employ a few different ways of managing them. In the first method, each spouse keeps his or her paycheck separate, and each contributes an equal amount to the mutual bills, regardless of income, much like platonic roommates do. Then each partner gets to spend whatever is left over out of his or her paycheck. This method probably requires the least amount of shifting the way your personal finances are managed, but it has its downsides. Things to watch out for are:

  • If you have the lower income, you may find yourself resentful that your spouse can afford a better standard of living because he or she always has more to spare.
  • If you have the higher income, you may feel a responsibility to pay for your partner when you go out, or feel guilty spending money on yourself.

Yours, Mine and Ours: This method is similar to the roommate method, but in some ways more balanced. Couples who use this method keep their accounts separate, and each contributes to the bills proportionally based on income. So if Jim makes 60% of the household income and Amber makes 40%, she pays 40% of each bills and he pays 60%. Like the roommate method, this allows each partner to continue to manage his or her own finances, and spend whatever is left over. This helps balance the amount each spouse has left over, but can cause tension when bill time comes. The pitfalls of this method are probably obvious:

  • The higher earner may not appreciate paying the bulk of the bills
  • The lower earner may feel like he or she is being subsidized

Pick a bill: The pick a bill method leans on both the financial and other types of strengths of each partner to find a balance. Instead of paying each bill together, the partners split the bills and they both pay the full amount for the bills assigned to them. The bills can be split by income or by preference. For instance if Jack has to have the NFL cable package, and Allie (who doesn’t watch football) wants a weekly maid service, she may pay the house cleaning bill and he the cable. Or for those of us on smaller budgets, maybe Jack pays for Netflix and Allie for Hulu. The point is that neither partner feels they are paying for a service they don’t want/use.

Making the transition Dealing with these questions up front (preferably before you get married) can make for a much less bumpy ride down the road. You can take a few steps together to start off on the right foot.

Have an honest heart-to-heart. Talk about all these methods and agree on one that you can both be happy with. Be brutally honest with each other about your strengths and weaknesses, outstanding debts, credit scores, and past financial mistakes. You will also want to talk about whether to combine your assets (like your mortgage). You may decide that one person should manage the finances and the other should contribute in some other way, like doing all the cooking, or all the handyman work. Your goal should be to start off the marriage with both of you on the same page. You will almost definitely make adjustments to the system throughout your marriage, but it’s much easier to adjust then to start from scratch several years in.

Make a budget. Regardless of who is paying the bills, you should try to both have input on the budget. Sit down together and decide what is most important to each of you. Include discretionary funds or “allowances” in this process.

Commit to honor each other. Money is one of the main topics married couples fight about. In all of this process, try to remember why you’re getting married. Decide ahead of time that your spouse is more important than money and make sure you approach it with that attitude. No matter what, combining two people’s salaries, spending and savings habits, debts and priorities into one household is going to cause a bit of friction. But making sure you understand each other, are well-informed, and getting on the same page with your spouse can help head off trouble before it starts. If you have any stories to share about how you and your spouse made it work, comment here!