Saying “I Do” to Joint Finances

by Andrea Kornstein

A married couple holding hands, talking about joint finances

After approximately 1,579 first dates, you found the love of your life and finally got engaged. You then proceeded to have a shameful number of arguments about the merits of the napkins selected for your wedding reception. And, of course, you and your betrothed lost countless hours to begging your mother-in-law to not wear white on the big day. But now you feel like you’re facing the biggest relationship challenge yet: combining your finances after marriage.

Your concern is wholly understandable. Studies have shown that financial arguments and stresses can lead to deep dissatisfaction with your spouse and even divorce. Thankfully, it’s possible to avoid this cruel fate. Juggling budgets and joint finances can be (relatively) easy if you approach the subject in a calm, clear-headed manner. Here are some steps you can take to facilitate your transition:

Joint Finances 101

Discuss your individual finances

You’d be surprised to learn how many couples don’t broach the topic of finances until well after their vows have been said. However, when combining your finances after marriage, it’s critical to sit down and have a frank, judgement-free conversation. Be upfront regarding the economic hiccups in your life. Tell your partner about any personal debt you’ve accrued, loans you’ve taken out, or poor investment decisions you’ve made. Conversely, you should also alert them to any and all assets you hold. It might be hard but you can’t start a fresh chapter if you’re harboring financial secrets or shame.

Address spending priorities and budgets

According to a TD Bank survey, one third of married couples admit to arguing about money at least once a month. This can be attributed to the fact that each spouse likely has their own expectation for how money should be handled. However, joint finances work best when everyone is on the same page. Beyond discussing your own financial health, spouses must talk about their expectations and spending habits. Some people love dining out multiple times a week. Others prefer indulging on special occasions only. Similarly, one half of the couple might be happy spending $500 a month on golf outings or singing lessons whereas the other person is all about saving.

Of course, there isn’t a singular “right way” to live (as long as it’s not well above your means). Frugality and pampering can both have their place. You and your loved one simply need to agree on what’s right for your new family. Just keep in mind that, if you’re truly committed to combining your finances after marriage, you’ll both likely have to make some compromises. 

Additionally, talk about how much you each should be contributing to household expenses. For example…

  • Do you believe the person earning the higher salary should pay more?
  • Is it better to split everything equally?
  • What percentage of your income(s) should be put into retirement savings or emergency funds?
  • How much do you want to allocate for socializing and recreational activities?

Answering these questions now will help prevent future arguments.

Consider opening a joint account

If you’re invested in combining your finances after marriage, you will likely want to open a joint account. We recognize that this very notion can cause unease in some people. Nevertheless, it’s the simplest way to merge your money. And you don’t necessarily have to go all in! While some couples decide to combine everything, others prefer to maintain both shared and personal accounts.

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Often in those scenarios, the money contributed to the joint account is used for household expenses, common bills, and shared outings or goals. The funds in the individual accounts goes toward personal wants and desires. This allows couples to join forces yet still retain a modicum of financial independence. Spouses are less likely to get angry if someone uses their own money to splurge on a fancy new shirt. And, perhaps more importantly, joint finances allow for more transparency.     

Update your important documents

Once you open up a joint account, you will probably need to update your paperwork. For example, you may have to contact your HR or accounting department to let them know your direct deposit needs to be re-routed to this new account. Moreover, you’ll likely need to change the beneficiaries on any insurance policy you hold (assuming you want your spouse to be the person who receives the money). And don’t forget to move or readjust any recurring, automatic debits you had previously set — especially if they are for shared expenses. 

Remember this conversation is ongoing

When combining finances after marriage, it’s great to have an initial discussion where you establish steps and ground rules. But it’s also critical that the conversation continues. After all, your earnings, expenses and priorities can change. You and your partner should keep each other abreast of any new spending habits or bills you might be anticipating. And you should regularly take time to reassess contributions to emergency funds, retirement accounts and other financial goals.

Combining finances after marriage doesn’t need to be a daunting or dreaded exercise. As long as you and your spouse communicate openly and honestly with each other, it can actually go smoothly. And who knows, it may even strengthen your partnership.

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