I’m a big fan of taking traditional finance advice…and tearing it apart. Okay, obviously there’s a lot of great traditional financial advice. But sometimes, a “rule of thumb” just doesn’t cut it. My future wife was offered a job last week, which means we’ll now be DINKs (Dual Income, No Kids) for the time being. We’re not getting married until next summer, which brings up the question of when to combine our finances.
Now that our income is “more even” and my future wife is no longer a student, we have more reasons than ever to combine our finances. Two of the biggest reasons people later get divorced are 1) dating the person is very different than living with them, and they just aren’t as compatible as they thought 2) irreconcilable disagreements about the family finances and spending habits. We’ve already been living together for two years, so #1 isn’t a risk. Now, that leaves the finances. We’re both very open about our finances. Before looking at her accounts, I could probably have guessed her net worth within about 10%. She obviously can see all of my finances by checking the blog at any time. She knows I have a Starbucks addiction, I impulse shop at Amazon on the daily, and I enjoy going to hockey games and concerts. She accepts all of these spending habits. I am also not one to micromanage finances. I prefer to take a macro approach and I don’t budget or prepare income statements regularly (I only create these occasionally for planning purposes). I have no problems with her spending “our” money getting her nails done, buying clothes, or getting drinks with friends. We’re in this together and what is mine, is absolutely hers.
I also think that combining our finances now will allow us to enjoy the early stages of our marriage. I don’t want to have to be running around to banks the week after our honeymoon to close accounts and move money around. Whenever I know something stressful is on the horizon, I prefer to tackle is sooner rather than later. It just feels good to accomplish these types of tasks.
With all of the positives, I obviously recognize there are some potential pitfalls to combining your finances before marriage. Firstly, if we didn’t get married, all of our money would be co-mingled. This really isn’t much of a concern for me because I’m just that confident that we’re going to get married. And if for some bizarre reasons we didn’t, and then we divided everything back out, I’d maybe lose $5k or so. That’s not really a big loss nor a big concern for me. The relationships that you have with people are worth more than money, and not getting married to my fiance would be 1,039,397 times more devastating than losing all of my money.
With all of that being said, combining finances (at any time) raises some complications for the tracking of my finances and goals. Firstly, I no longer have my finances; we have our finances. My goals, combined with her goals, become our goals. And that means that I need to reassess the goals I had set at the beginning of the year. Also, check out our balance sheet after combining finances.
Original Goal #1: Save $5,000 toward new car
This year I saved $5,000 toward a car, which, combined with the $1k I already had, gave me $6k for a car. I expect to purchase a car in the next couple of days, so this goal is now completed. Next we’ll need to buy a car for my fiance.
Original Goal #2 & 3: Save $5,000 toward wedding and $5,000 toward honeymoon
I’ve managed to save $7,218 for our wedding/honeymoon. Together I think we will easily be able to reach this goal. It will take about $700/mo at this point to surpass the goal.
Original Goal #4: Save $5,000 to contribute to my Roth IRA
I kept up with this goal on my own and had $2,500 of the $5,000 saved as of July 31st. However, my fiance hasn’t saved anything for her contribution this year, so we now need to ramp this one up a lot. We need to save $10k by the end of the year. In August I saved $1,500 for this, so we now have $6,000 more to save in four months, so we need to save $1,500 each month for this goal.
Original Goal #5: Save at least $10,000 toward a house
When I made this goal I knew it was going to be a big stretch. However, I hoped to have more than the $0 saved that I currently do. I’d like to see us save $2,000 for a house by the end of the year just so that we have something started. This ends up being $500 per month.
Once you add in the $200/mo that I need to save to buy a new computer next year, we’re looking to save about $3,500/mo over the next four months to reach these updated goals. I’ve updated the goals in the sidebar to reflect these adjustments. It will definitely be a big adjustment to manage the finances for two people and save for these adjusted goals, but hopefully it’s not too rough.
What do you think about our choice? Would you ever consider combining finances before marriage? Or do you think it’s best to wait until legally married?