We’re Getting Married – Should We Join Our Accounts?

MarraigeMoney is one of the biggest stressors in a relationship. There’s no one right way to handle finances in marriage, and the best choice is ultimately what works for you and your spouse. Although some of us want to go into a marriage sharing everything, smart financial planning actually dictates that you don’t have to… and in many cases shouldn’t. Here’s a system many couples start with.

Three pots
In the “three pots” system, each spouse contributes money to one money “pot” for household expenses, and his or her own “pot” for individual expenses. No one gives up their independence or autonomy completely, but some finances mingle.
Maintaining separate accounts isn’t a sign of distrust. In fact, the opposite is true. Allowing your partner to maintain financial independence sends the message that you trust that person to not keep secrets about finances, and to contribute responsibly to your financial life together. Autonomy also fosters self-confidence. That feeling of control over your own money is critical for many, many men and women.

Keep a joint bank account for joint expenses
Having a joint account for shared expenses can really simplify bookkeeping for the household budget. Both spouses don’t have to contribute equal amounts (and shouldn’t if one earns significantly more than the other), but the total each month should cover everything you’ve agreed to pay together, like the mortgage, utilities, groceries, insurance premiums, auto loans and so on.

Create a detailed budget together
You need to know exactly where your money goes and how much you need each month to cover all of your expenses. Once you start spending someone else’s money, it’s important that you’re able to account for it. The household budget must only include things you both agree to pay for together.

Keep separate accounts for separate expenses
Costs that are related to the passion of one spouse are prime targets for separate budgets. Maybe one enjoys concerts and the other collects books. These optional purchases may be made with money set aside by each person in a personal account.

Use the same rules for credit cards
Credit card accounts do not become joint accounts upon marriage. Consider opening a joint account for charging things – family vacations, for example – that you’ll pay off together. Successfully managing credit cards in marriage is to practice total honesty with each other. Don’t hide purchases, especially debt. Your separate credit card debt won’t affect your spouse’s credit score, but it will affect your ability to move forward as a team with large, important purchases, like a home.

Most important: save together and communicate frequently
Part of your financial life together must be to save. Make a plan for building an emergency fund, and for building retirement accounts for each spouse. If you have children, discuss whether and how you plan to help them pay for college – one of you might be willing to borrow money later on while the other prefers to start saving early. Touch base about financial details at least several times each year (monthly if income or expenses tend to fluctuate). Don’t keep secrets.

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