Combining Finances After Marriage - Rings + MoneyWith my wedding less than a year away, it’s becoming time to start thinking about how our finances will be structured leading up to and after the big day. I’ve been paying more attention to how friends structure their finances over the last few years, and it’s surprised me how many people decide not to combine their finances. Some will avoid any combining of finances, while others will have joint accounts and separate accounts.

Reasons to Keep Finances Separate After Marriage

While people will inevitably make a number of excuses why finances should be separate after marriage, I can only think of a few that are worthy reasons.

  1. You have spending habits that your significant other doesn’t agree with. If this is the case, then I think it’s time to shape-up. You aren’t going to have a happy marriage if your significant other doesn’t accept you for who you are. If you love working on classic cars and it tends to be a bit of a money sink, your significant other needs to be accepting of this and allow you to pursue it.
  2. You are likely to get a divorce. If you think, for some reason, that there’s a greater than 25% chance that you will get a divorce at some point, then it makes sense to keep your finances separate. This will cut down on the eventual mess. Although, I’m really not sure why you’d get married if you believe this.
  3. You have a significantly grater amount of wealth than your partner. If you have less than $10M net worth, this isn’t a problem for you. But if you’re worth $100M or something else extremely high, then it’s just smart to protect your assets because there are people out there who will get married for the money. This also goes back to #2, because you believe that there is some likelihood that your partner is in it for the money.

I think that if you have these issues, you not only have financial problems, but you have marriage problems that you need to work out. All of the reasons for not combining finances relate to not trusting your significant other, or not sharing or accepting their values. There are a lot of other excuses that I’ve read, but I don’t consider most of them to be valid reasons to not combine finances after marriage.

My Take on Combining Finances After Marriage

I think the benefits of combining your finances are pretty clear, but it’s not going to be an easy task. Combining finances with your spouse requires a significant level of communication. If one of you has a spending problem, you’re going to want to set a spending threshold beyond which approval from the other partner is required.

Steps to Combining Finances

The first step to combining your finances after you become married is to lay everything on the table. You need to be completely transparent. This includes your assets, as well as your liabilities. This step should be completed well before marriage and probably before engagement, or at least shortly after. It’s shocking how many people get married before doing this. “Oh, you have $75k in student loans? Cool, glad we waiting to discuss this after we were married. Anything else you’d like to tell me?” That doesn’t seem cool at all. This part will be easy for me and my future wife because we are both already very transparent. She knows how much money I have (easy to check my blog, right?) and I know what she has. I helped her set up her Roth IRA and choose her investments. She knows how much I have saved. After I paid off my student loans, neither of us has any debt. So that’s easy, we basically have step one covered.

Once everything is laid out, you need to start combining accounts. Right now we have a joint account that we opened to pay out shared expenses out of. We use this account for utilities, groceries, and restaurants. It’s not always “even”, and that hasn’t seemed to bother either of us. However, right now we are simply depositing equal amounts of money into the account. After marriage is when the full combination occurs. At this point we will probably close our existing accounts and open a shared join account. This makes a nice clean break. We would dump all of our checking account money into one account. We would probably keep my Ally accounts, and I will add her and they will become our joint savings accounts. We will then combine our credit card accounts to simplify things and we will each be authorized on the accounts.

Combining finances, in my opinion, is the only way to truly combine your lives and become lifelong partners. You can definitely have a successful marriage without combining finances, but you’re never going to have the same level of trust and openness. My future wife and I are in this together for the long-haul. I don’t care if I have a $1M salary and she racks up $1M in debt, we will work through anything that comes our way together. By becoming married we are forming the ultimate alliance (think Batman + Catwoman) against whatever life brings us.

What Others Think About Combining Finances After Marriage

BibleMoneyMatters discusses the reasons why someone might feel one way or the other. Some keep their finances separate because they believe each spouse should be self-sufficient, while others might do so because it largely “keeps things the same” as from when they were single. There’s also some great advice on how to talk about the issue with your spouse.

MoneyUnder30 has documented her experience with combining finances well. Amber said that after having independent finances for 27 years, it was a bit of a shock to her system. However, she points out that combining finances is all about being a team, and I agree with her. In the end I think it brings you closer together. Nothing like conquering a situation together to bring you closer (as long as it doesn’t tear you apart).

Melissa over at SupernovaBride said back in February that she would be combining her finances with her new spouse. She explained their currently split finances set-up and laid out some great reasons why they plan on combining finances even though their current system is working out well.

What do you think? Is my assessment correct? Or does combining finances lead to more marital issues? How do you structure your married finances?

(Photo: Robo Android)