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You share a home and a last name, but do you also need to share finances with your new spouse?
From future dreams to habits and family plans, there are many important relationship topics to discuss on the road to marriage. Even once you’ve said your vows, those important discussions don’t stop — the topics just change a bit.
One of the biggest decisions you’ll need to make as a newlywed is whether or not to combine finances with your new spouse. But bringing up financial topics can be tricky, especially if you and your spouse don’t agree. In fact, the APA found that money is the biggest source of relationship conflict for 31% of adults.
Here’s a look at why you might (or might not!) want to consider combining finances with your spouse, and the easiest route for mixing money with your betrothed.
Getting married doesn’t mean that you’re obligated to combine finances with your spouse. In fact, many married couples might find it actually makes more sense to keep their finances separate. It really comes down to each individual and their specific financial situation.
After getting married, you have three options:
The option that’s right for you and your spouse may not be the same as your sibling, best friend, or neighbor…but that’s okay! Personal finance is personal, after all.
Hopefully, you’ve made it a point to discuss finances with your significant other already, prior to getting married. This can be a great way to ensure that you’re both on the same page when it comes to future financial goals, existing debt burdens, spending habits, and even a shared household budget.
You and your spouse don’t necessarily need to have the exact same beliefs — or even the same habits — when it comes to financial planning. However, it is important to know you’re in agreement about managing joint finances, or are willing to compromise with one another. If one spouse believes in maxing out the credit cards each month while the other saves every penny they earn, there’s likely to be more than a few arguments about finances.
Here are a few questions you may want to ask yourself and your spouse if you’re thinking about combining money after getting married.
You may already have a good idea of how much debt your spouse is currently carrying around. If not (or if you two didn’t go into great depth in previous conversations), it’s a good idea to sit down and put it all out on the table.
Add up what each of you owe, whether you have:
Create a plan for how you’re each going to tackle those debts — together or individually — so that you can begin working toward joint financial goals.
Even though you’re married, you each have your own credit score and history, independent of one another. If you ever plan to buy a house or car together, though, your new spouse’s credit will come into account.
Talk about where you each stand in terms of credit history, credit scores, and how you can each work to improve.
Your spouse’s credit history is important, yes. Even more important than their past, though, is how you can expect them to manage their accounts moving forward.
Does your spouse carry a credit card balance from one month to the next or pay off their full statement? Do they take care of their bill the very first day it posts or occasionally miss a payment?
If you plan to combine finances and/or open accounts together, it’s imperative that you’re both on the same page when it comes to managing those accounts in the future.
Emergency savings, the down payment on a future home, retirement accounts…there are many goals you or your spouse might each be focusing on. It’s time to talk about where each of your priorities lie and where you stand in terms of progress.
Chances are, you’ve talked about the future many times before your wedding day. This conversation may be a bit more detailed, though, and might involve creating a timeline that includes both of your important plans.
Where do you each want to be five years, ten years, or even 25 years down the line? Does one of you plan to retire at age 40? Does one of you want to stay home for a few years once children are born? Do you have dreams of traveling the world in luxury while your spouse plans to retire to a cottage in the hills?
Not only will you two need to compromise on your future plans, but these may also mold your financial efforts from this point on.
Odds are high that you and your spouse have different money habits. There’s nothing wrong with that, but it can be wise to identify whether one of you is a saver and one is a spender in your marriage.
Both personality types play an important role, but may influence everything from your monthly budget to agreed financial roles in the home.
On that note, now is a good time to decide who will manage the finances in your marital home, if you haven’t already. While some couples find it easier to give this role to one person, others may choose to delegate tasks.
Does your spouse enjoy paying bills each month? Are you particular about making payments on time, every time? Is one of you insistent on tracking net worth monthly? Assign roles accordingly.
Whether you’ve decided to consolidate every account you each own or want to take a more blended approach, combining finances with your new spouse doesn’t have to be very difficult.
It might be easier to open brand new joint checking accounts and savings accounts, rather than adding your spouse to an existing account. This way, you can also choose a bank that offers the features, accessibility, and even interest rates that you both want.
Many couples combine a portion of their paycheck to maintain a shared account. This is used for household expenses, bills, and other shared goals. At the same time, though, they also choose to keep their own individual accounts for “fun money” or personal expenses. This hybrid approach may offer the best of both worlds.
There are a few different options for joint credit cards. You can:
If you have a personal loan, mortgage loan, student loans, or even an auto loan, refinancing can be one way to add your spouse to the debt while also snagging better loan terms. While this might not feel necessary for some couples (as it means your new spouse is signing up to share the obligation of your debt), it can be a great idea if your spouse has good credit.
Adding a creditworthy co-borrower to a loan can often mean locking in a lower interest rate and/or better repayment terms. The less you pay toward that debt, the more you both have to put toward important goals!
Building a successful marriage often hinges on a few key factors: respect, communication, shared priorities, and compromise. This is especially true when it comes to money.
As a newlywed, the idea of combining finances with your spouse can feel daunting and intimidating. While there are many benefits to doing so, there are also a few important considerations (and potential hurdles) to keep in mind.
In the end, a hybrid approach might be the best answer for you and your partner’s financial life. Choose the path that puts you both in financial agreement and able to continue working toward future goals together.
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