Q&A Articles

For Better or Worse: Should Couples Marry their Finances?

Posted in: Money Management, Q&A

In the not-too-distant past, couples didn’t think much about combining their finances. After marriage, they would open joint bank accounts, take out a mortgage together, and share all of the income and household expenses.

But things have changed since the 1950s. Today, it’s more common for both partners to earn their own income and to bring debts and assets to a relationship. In such cases, merging finances is considerably more complicated.

Whatever your situation, it’s important to talk to your partner or spouse about whether or not combining finances is the right thing for your relationship. Here are eight issues to consider when making your decision:

  1. Communication: Money is the number-one cause of conflict in marriage, so it’s best to establish open and honest communication about your finances early on.
  1. Review the numbers: With a foundation of trust and honesty, take stock of your financial situation. Discuss your income, savings, retirement accounts, student loans, credit card debt, and other assets and expenses. If you’re considering merging your finances, it’s best to approach it with eyes wide open.
  1. Compare spending habits: Take a close look at your spending habits before you combine your money. Is she a spender or a saver? Does he use cash only, or does he tend to buy on credit? This can be a real eye-opener, particularly if you grew up in families with dramatically different incomes or financial philosophies.
  1. Create shared goals: Sharing a life together means aligning the goals for your relationship – including your finances. Determine your long-term financial aims for your marriage – whether or not you want to buy a new house, take a dream vacation, make investments, etc. It’s also important to set goals for paying off debt, building your emergency fund and saving for retirement.
  1. Write it all down: Create a comprehensive monthly budget that includes your income and all household expenses including your mortgage or rent, utilities, car payments, insurance, food, savings, etc. Make sure you agree on how the funds should be allocated.
  1. Decide who pays for what: Many couples enter a relationship with two very different incomes. Whether or not you merge finances, agreeing on how you will divide up the household expenses can head off a lot of resentment, arguments and mistrust.
  1. Think twice before you cosign:Carefully consider whether or not you should share debt like student loans, auto loans or credit cards. Even if the relationship ends, you will be equally responsible for the debt.
  1. Agree to discuss big expenses: You can avoid a lot of relationship headaches by agreeing to make big financial decisions together. Discuss any purchases that exceed a set amount – $100 or $1,000, for example – to make sure you agree it’s a worthwhile use of your money.

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