Tips on How to Combine Finances After Marriage

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5 ways to successfully combine and manage finances with your partner or spouse

combine finances marriage

At some point in your life, you may have heard that money is the main cause of most failed marriages. But where’s the proof?

The reality is, money can be a source of tension for couples, especially newlyweds. But it’s not fair to blame your problems on money itself. Rather, some of your financial troubles may be avoided when you and your partner understand how to merge finances and work together to achieve your goals.

Ideally, it’s more productive to start sorting through your finances before you say ‘I do.’ But in case you’re one of the 57 percent of couples who didn’t talk money matters before tying the knot, these five tips can help you build healthy financial habits before the honeymoon phase wanes.

Prioritize Financial Management

Knowing how to merge finances as newlyweds doesn’t happen on its own. You must first make it a priority to discuss bills and bank accounts, and ensure you each understand where your money is going. Start by making a date to discuss your unique financial situations. Consider a time when you each are at your best, such as after breakfast or during an extended lunch break. It’s a good idea to make these “money dates” a regular event to ensure you’re both aware of your ongoing financial situation.

The majority of couples don’t discuss financial matters before tying the knot.

Create a list of your own bills, debts, and other expenses, then compare them to your partner’s. While some of these expenses may be reduced or overlap after marriage, it should illustrate what you can expect from your bank statement each month.

Be transparent about any existing debt to ensure you’re starting your financial future on an honest front. One survey from Haven Life shows that 70 percent of respondents would rethink their marriage decision if their partner secretly had $5,000 or more in debt. In this same survey, 20 percent of respondents revealed they had some form of secret debt.

credit card combine finances marriage

It’s important to remember that your spouse may not agree with what you consider to be “good” money management. People view money differently for a number of reasons, including how they were raised and their experiences with finances.

As a result, handling your marital finances is never a one-and-done deal. It takes continued open-mindedness and peaceful communication to ensure both parties know how to merge finances and manage them successfully.

Related: How to Protect Your Portfolio Against Unpredictable Financial Crises

Establish Long-Term and Debt Reduction Goals

Work with your partner to establish what your finances can realistically achieve. Whether you dream of retirement, homeownership, yearly vacations, or relocation, your ability to do so comes down to your combined dollars and cents.

Handling your finances is never a one-and-done deal. It takes continued open-mindedness and communication to ensure both parties know how to manage them successfully.

Once you’ve defined your shared goals, determine how much money you need to get there. If you’re hoping to retire, you’ll need to figure out how much of your income to devote to a retirement plan or other investment. For short-term goals like vacations, look into short-term investments or savings strategies, such as CD’s or money market accounts.

While each of you may have existing investments, you should take time to review your collective portfolio to ensure your goals and financial strategies are aligned.

Develop a Bank Account Strategy

If you each have established bank accounts before marriage, will you keep those same accounts or opt for a joint one? Or perhaps both?

There are no rules stating that married couples have to divulge all assets or start their banking strategy from scratch. Yet, having a shared account can help to establish financial trust and add transparency to the relationship.

A study from the National Center for Family and Marriage Research found that couples who shared a bank account were less likely to get a divorce. Alarmingly, couples who did not combine their financial resources were 145 percent more likely to end their marriage.

However, having separate bank accounts isn’t a guarantee your marriage won’t last. Some couples opt to retain their existing accounts and open a joint account. Others may grant their spouse some form of access to their account without handing over partial ownership.

Calculate a Monthly Cash Flow Budget

budget combine finances marriage

TD Bank’s Love and Money study revealed that 63 percent of respondents believe their spouse overspends. For Millennials, that number jumped to 83 percent.

Overspending, or not saving enough, can create gaps in your financial plan and won’t be sustainable in the long term. It’s important to get on the same page with spending and saving as early as possible to ensure your long-term success, both for your relationship and your finances.

Establishing a budget can help to ensure each spouse stays within your monthly cash flow. Using your projected cash in and cash out, you can establish a tentative budget to monitor both parties’ spending habits.

  1. Calculate your inflow, including salaries, investment income that isn’t being reinvested, rental income, etc.
  2. Determine your outflow, accounting for home expenses, auto expenses, debt payments, food, and other costs.
  3. Subtract your outflow from your inflow to determine your surplus or deficit.
  4. If you have a surplus, you and your partner should decide together how to use those funds.
  5. If you have a deficit, you and your partner should discuss debt reduction options.

Plan Your Exit Strategy

Most people don’t enter a marriage with an end date in mind. The reality is, however, that some marriages don’t last until death. If that’s the case, you’ll be glad to have a tentative plan on how to divide your financial assets.

Some couples opt for a prenuptial (or postnuptial) agreement that outlines their entitlement to financial shares if a marriage ends. Though agreement terms can vary from state to state, a prenuptial or postnuptial contract can put both spouses’ minds at ease knowing what to expect financially in the event of a divorce or death.

Determining an agreement prior to marriage can help both parties avoid messy and costly litigation during a marriage dissolution.

Some things you might include in a pre- or postnup:

  • Property division
  • Spousal support or alimony terms
  • Marital debts
  • Division of assets if one partner dies during the marriage

Despite the somewhat controversial nature of the prenup, a survey of 1,600 members in the American Academy of Matrimonial Lawyers revealed that 63 percent of respondents noticed uptick in prenups from 2009 through 2012, with 52 percent of divorce attorneys seeing an increase in women seeking a prenup.

Determining an agreement prior to marriage can help both parties avoid messy and costly litigation during a marriage dissolution. However, these agreements might not be in the best interest of every couple. A consultation with a financial advisor can help you make a sound investment in your post-marital financial future.

Related: How to Protect Your Portfolio Against Unpredictable Financial Crises

Discussing finances with your partner or spouse-to-be isn’t always easy, but most agree it’s necessary for a happy, healthy marriage. Approaching the subject with honesty and an open mind can help you begin your lives together on a positive note. Form good financial habits early and you’ll be able to conquer whatever life throws at you—together.

Do you have specific questions? We’re here to help! Reach out to us today. 

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