So you’ve finally tied the knot! You’ve had the honeymoon, started to get used to being called Mrs. Hubby and you are ready to start living your life as one family unit. And now you realize that planning the wedding was actually the easy part. Now you have to change your name, update passports, social security numbers, bank accounts, etc.
And while we are on the topic of bank accounts you’re thinking ‘what am I supposed to do next. Get added to his account? Can I keep my own account? open joint accounts? what now?’
If you are wondering what your options for handling your financial life then you are in the right place. There are 3 ways that you can handle your finances as a couple but different situations lead to different financial account setups. Not everyone ascribes to having one account where all funds are deposited, and it definitely depends on how you both feel as a couple for what to do. Here are some ideas on to help you identify which financial account set up might work best for you if you mostly fall into these views and/or situations.
This is the most common option married couples choose with SmartMoney Survey finding that 64% add all their paycheck to a joint bank account. Adding your spouse to are notes, house titles, credit cards etc can be a way to remove the single life and start a new one as a couple. A fresh relationship, fresh finances. Where everyone has open and equal access to all the family finances and there are no surprises on the financial situation.
When is a Full Merge The Best Option?
- One person has earned income or there is joint income (rental properties, company business etc.)
- You both want the full picture of the family’s financial situation at anytime
- You both view and decide on all purchases and financial decisions as a team
- Most bills are already co-mingled, for example, one family cell phone plan, joint owners of each car, joint credit cards etc.
- Any bill is viewed as a family bill
- Any debt is viewed as couple debt (whether before or after marriage)
- Both you and your partner share the same money habits, views, and goals and want to couple together to attain financial success faster.
- One partner has a different money view from the other and wants to work together to help keep each other on track.
- Don’t have strong finance preference as long as you are together.
Keep it Simple & Separate
Of those surveyed, only 14% opted for keeping their accounts separate from each other, the least favorite option. Each party manages their own finances individually and have full autonomy of financial decisions. This can be a great way to take ownership of your finances and not ‘check out’ and leave the decisions up to one partner.
Who does Staying Separate Work For?
- Both you and your partner work, or have separate earned incomes
- You both want full autonomy over your salary that you earned
- Joint living expenses are assigned to each person, for example, you cover the electric, cable/internet bills and he covers the mortgage, water bill etc.
- Personal bills are owned and handled separately – car notes, student loans, debts (outside the marriage or while married but on personal cards) are paid by debt owner
- Both you and your partner share the same money habits, views, and goals and can move forward toward attaining financial success independently
- Have strong preferences on financial decisions
- Partners come in at fairly equal levels
Hybrid – A little of this, A little of that
Some couples might find it a good compromise to use a hybrid set up. Where some accounts are joined together especially for paying couple related bills, and separate accounts are also kept to maintain the autonomy of each partner in the marriage. In the event that the account holder has an untimely demise, those separate bank accounts are not easily awarded to your surviving spouse, usually requiring probate court and lots of fees… yikes.
Who Does It work for?
- Both partners work/have income or one partner works but there is joint income (rental properties, company business etc.)
- You both want to have a view of the family financial status (ensure all joint/important bills are being paid), but also want autonomy to make personal purchases without team discussion. For example, you want to know that the mortgage is being paid, but you don’t want to have to discuss you Victoria Secret new bra purchase.
- There are joint expenses that you and your partner contribute to paying but some expenses are assigned separately. For example, both partners contribute to paying the mortgage, but the cable bill is assigned to one partner, and the water bill is assigned to the other.
- Before marriage debts are separated by owner and paid by the owner and after marriage debts are paid by the individual who has incurred the debt. However, joint debts are shared and both contribute to paying.
- Both you and your partner share the same money habits, views, and goals and choose to work independently on some ventures and couple together to attain financial success faster on others.
- One partner has a different money view from the other and want to work together to help keep each other on track.
- Has strong preferences on your bank but can find common ground for a bil pay account
Set goals as a couple
There is no ‘one size fits all’ strategy to follow and it heavily depends on your situation and your individual and joint preferences. But every strategy has pros and cons. There are some things you are readily willing to share and there might be others you choose to keep separate.
Regardless of which plan you choose to follow, don’t dive head first into merging your finances without having a money conversation with the answers to the following questions:
- How will couple expenses be managed?
- How will we pay off debts we came into the marriage with? And how are we handling debts accumulated during the marriage (shared and separate)?
- How are we saving for emergencies and retirement/investments?
You want to have the conversation ever so often, at least once a quarter, to ensure the stragety is still effectively working for you.
At the end of the day, you both need to feel comfortable that you understand and in control of your finances