Our Path to (Finally) Merging Our Finances

funny sign at the bank by pale man feed me at Flickr!After six years of dating followed by five years of marriage, my wife and I finally decided to merge our finances together into the same accounts. We’re going to use a local bank for teller purposes and paper checks, and stay with ING Direct for much of our checking and savings purposes.

Why did this take so long? A lot of people were surprised that we didn’t just do this by default when we got married, or even earlier. There were several reasons why we did not.

First, we didn’t have genuine conversations about our personal finances before we got married. As our relationship grew, we had deep conversations about almost everything except for our money. It wasn’t until three years after our marriage (and some serious financial troubles along the way) that we finally started talking seriously about our money decisions.

Second, we kept many bills separate from each other. There were simply some bills I paid and some bills she paid, carried over almost directly from our dating days. In short, we just let inertia carry us, instead of rethinking things. This worked really well most of the time, but it made a clear accounting of our financial situation almost impossible. If one of us had a larger bill than normal, could we rely on the other one’s income to pull us through? This was never clear, and we often just muddled through.

Third, we were both fairly concerned about privacy. Not so much in the sense of directly hiding things from each other, but in the sense that it gave the other person free reign to leaf through our spending, likely making judgments on our individual spending choices. It was something that we were both very uncomfortable with for a long time – and something that we’ve become more comfortable with as we’ve talked more and more about our finances.

How did we come to this decision? Mostly, we came to realize that we were simply in a different place than before. Instead of each of us handling our own bills and not really paying attention to what the other was doing, we were pretty clear on what we both were doing. We watched each other grow more careful and frugal with our spending and we came to trust each other’s spending habits more.

We also began to realize all of the little ways our separate accounts were costing us. Instead of having a complete financial picture whenever we needed it, we often strained and stretched to cover our individual bills ourselves. We also realized that some of our banking choices were still dinging us with fees, and there was no better time than the present to start over and choose a better account.

How did we choose a bank? We basically did a canvas of all of the banks within a fifteen mile radius, comparing their basic checking account offerings. We wanted a free basic checking account with free checks and free online banking, plus reasonable hours. Ideally, I wanted one that I could easily reach on a bicycle ride.

Basically, we wanted easy access to a real live teller for services such as check cashing and change redemption, plus a paper checking account that had no maintenance fees, online banking access, and a wide ATM network. Since we planned on keeping most of our money with ING Direct, we didn’t care about interest rates much at all – we mostly sought to avoid fees.

Knowing this, I just perused the websites of every bank in the area, gathering information about their checking accounts, and we found four that had all of the criteria we wanted. We decided to simply select the one of the four with a branch closest to our home.

One big piece of advice If we learned one lesson from our experience, it’s this.

Communicate with your partner about money from the beginning, and don’t leave anything hidden when you talk about it.

Complete honesty and regular, deep communication about your finances as you begin to merge other parts of your lives is vital. My wife and I now have very regular talks about our personal finances and we’ve moved to a complete open door policy of looking at any statements or material that comes in the mail.

This communication opened the door to financial success. We set goals together. We learned what we needed to do to reach those goals together. We created microgoals to help us get started along that path. We talked through our important decisions.

And now, our financial future is completely linked.

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51 thoughts on “Our Path to (Finally) Merging Our Finances

  1. xiagox says:

    wow, this was a very nice post. It’s an issue I sometimes think about when I think about my future and marriage.

  2. "Mo" Money says:

    By talking over your finances, your marriage will be stronger, because now you have a single goal that you both are working toward, and you are communicating.

  3. Ken Deboy says:

    Hi Trent,
    My wife and I just did the opposite, due mainly to the 3rd point you made. We were constantly arguing over things that I’d buy that she didn’t think I needed to buy.
    Now we put all our money into the joint account, but keep a little out to each put in our own private account. Neither has any say over how the money in the others’ private account is used.
    So far, it has worked for us. Now that I feel like I’m actually in control of some of the money I earn, I’ve actually cut my spending on stuff my wife would consider “wasteful.”

    cheers,
    Ken

  4. mp99 says:

    My wife and I have been married for 14 years and we still haven’t merged accounts. Our names on obviously on both accounts.

    We talk about money and our savings often, but I really don’t have a clue how much she has in her savings (she’s aware of mine because I have all kinds of spreadsheets).

    We have never once had an argument about money and we intend it to continue that way :)

  5. guinness416 says:

    There’s always a deluge of fellow commenters telling me I’m headed for divorce whenever I mention it, but “complete honesty” isn’t equivalent to combined finances, for many couples. Separate chequing, joint savings for us, but I’m sure there are any number of permutations that can work.

  6. Karl says:

    Trent,

    Good post. Your point that finances are a crucial topic for to-be-weds is a good one.

    Before we got married, we talked frankly about money, debt, etc, and agreed to do as Ken ultimately did. We set up a joint account for all of the non-discretionary expenses and for contributions to savings. We also set up individual accounts for no questions asked “fun money”. We take our fun money very seriously, making sure to transfer that money (equal amounts into both accounts) on the first of every month. Our system works pretty well, though naturally I think we would both like to have more fun money.

    kj

  7. kman says:

    My wife and I did this even before we were married. Still do. We have a budget category for our personal spending, we take it out as cash every other week. If we buy something online the cash for it goes into a “piggy” bank. This allows for freedom for each of us to bu what we want without the other questioning it as well as keeping the spending in control. (We were going over when we didn’t use cash)

  8. Ted says:

    We did a single joint account for a long while, but found it a bit much to deal with in the sense that there were so many little ATM transactions for us to both work out of one account but keep all the little transactions up to date.

    We moved to four separate accounts, one for each of us, one for the main household bills, and a fourth to manage the inter bank transfers and direct deposits (security wise the xfer account is only used to move money around and typically has about $0 in it).

    Each of us have $100/month “no strings attached”, and some hundreds for the things each of us take care of individually (her for food, me for offerings for instance). Each of those checking accounts has an attached savings acct. This makes it easy for us to individually and corporately manage our saving and spending.

  9. writer dad says:

    Communication, and regular, deep conversation is important when it comes to money, and everything else.

    It’s the most important thing in a marriage.

  10. Sassy says:

    Enjoyed the post. My husband and I combined our finances and accounts shortly before we got married — but it was tough, because I watched my parents argue about money until they split their accounts (Dad took an easy going approach to bill deadlines and my mother was driven crazy until she took things over) — so I thought that being happily married meant separate accounts and my husband to be thought that joint accounts were the key to a happy marriage…after some very intense discussion, we combined accounts at a different bank than either of us had been using and I balance the checkbook and pay most of the bills…seems to work, although I was nervous the first couple of years! I’m glad we did it as it forced discussions we might have avoided for years. I guess the important thing to make sure you talk and accomodate both positions in some way that makes sense to you.

  11. Eden says:

    My wife and I merged accounts earlier this year and we do not regret it at all. It makes financial management much easier and it naturally becomes easier to be honest and open about our finances.

  12. Monica says:

    My husband and I have joint accounts. We made a decision when we got married we would. Like many others, we agreed upon and have a “fun money” amount built into it to spend on as we please. It’s something we wanted to do, and for us, the joint accounts have worked beautifully. Now, it’s not because we’re something special, it’s simply because we both came from prior marriages where the spouse was hiding their spending habits. When there is no money, due to hidden bills, the bank doesn’t care who’s bills are who’s when they’re about to foreclose on your home. You’d think we’d shy away from joint accounts after bad situations. However, because of it, we wanted to talk finances before we got married (due to getting burned in the past). That helped us a lot. And this is my point, we all have different situations and come from different backgrounds. Communication and honesty with your partner is paramount. So, in my opinion, it’s not a question of joint or separate accounts, the question is “What works best for my partner and me”? Communicate about it, be honest, and make decisions based on what works for YOU, then go for it, because it will then work.

  13. Jeff says:

    Spend/save together for absolutely required spending, or anything else you agree on >90% (food, shelter, college for the kids, medical, etc.).

    Split everything else down the middle to be used however you like — hold on to more for security, spend more for luxury, as desired.

    Many potential disagreements vanish. Some others are simplified down to more philosophical discussions, with perceived lack of money no longer a lever.

  14. M. Edward says:

    Trent, this is great to hear. My mom and dad often have money tension; while it’s not enough to strain their marriage, I couldn’t live with that kind of stress. This is one of the best posts I’ve read on the Simple Dollar–and that’s saying something.

  15. I have been dating my boyfriend for 4 years now, and are just starting to open up about our finances. We were in school for most of our dating life, so money wasn’t much of a topic.

    Thank you for giving us a glimpse into your personal life, so that we can learn from your mistakes and triumphs. :)

  16. BTGNow.net says:

    It’s great that you guys are talking about, and working through, your finances together!

    I have my own feelings about joint bank accounts which differ from yours (though this is without direct experience), but I just wanted to add my two cents:

    I think people should ensure that they are compatible before they get married, especially when it comes to the realm of finance. This doesn’t mean that they have to be on the same page all the time, but it should at least mean that they are capable of discussing their finances together. Personally, I’d like to see everyone who’s dating have this conversation at some point too, why wait until marriage?

    Great post, very good lessons to be learned.

    http://www.btgnow.net

  17. almost there says:

    Being a longtime married couple we have always comingled our funds. I couldn’t imagine it any other way. I think of debt as holes in a lifeboat. If one partner or both are putting holes in the lifeboat unbeknownst to each other it is hard to plug the leaks (paying off debt) before sinking the boat. I have spoken with couples that were both divorced and understand why they need their own pile of money while paying into a common fund. Looking over 20+ years of married spending I can see that my spouse has spent about 4x what I spend outside of the normal bills (food,shelter,cars,insurance, etc.)

  18. JReed says:

    It’s nice that you personally have finally arrived at this decision but legally this was already determined for you on the day you got married unless you had a written prenuptual agreement. I used to get such a charge out of your own monthly “personal net worth” fiqures that didn’t include her debt. Are your financial contributions as a self employed writer keeping up with her job generated financial contributions? If not, did this in any way prompt the new merger? Maybe a clothesline, woodstove, and deleting the daycare could help justify your stay at home employment.

  19. Amber says:

    Growing up, my parents had only join accounts, so I always assumed that was what people did when they got married. But my parents were, and still are, self-employed and my mother makes the lion’s share of the family purchases and does the accounting, so it was easy for her to keep things straight.

    At our house, we are very open about finances, but we keep our own accounts. With out lifestyle, it is hard to keep up with the other person’s ATM withdrawals for lunch or dog food or whatever. Instead we have divided budgetary responsibilities. For example, I buy all the groceries, while my husband pays for dinners out. We have a budget for both, but it’s easier for us to keep track this way.

  20. Amber says:

    oops, “joint accounts” not “join accounts” and “our lifestyle” not “out lifestyle”

  21. Wow…it’s amazing to me to hear all the different ways that people work their finances out. I think what’s important is being open, honest, and holding each other accountable. If you have those basic principles, then finding the arrangement that fits your financial situation, personalities, etc. can take any shape you think of.

  22. Maha says:

    Like many commentators here, we also have a joint account and each a personal account. Since my husband earns significantly more than me, his contribution to the joint account is a higher percentage of the total household spending than mine. We set this situation up from the get go because his spending tastes run much higher than mine, and neither of us wanted to justify to the other why or how much we spent on something fun.

  23. Thomas says:

    This article seems rather confusing since you are preaching about finances to other people. This entire time your wife and you have not been honest about all your bills and this has caused problems. Have you mentioned this before in this blog as the cause before for your financial problems? Not than I can recall. Plus if your heritage is Indian, I thought there was more communication over finances,at least the families that I know of Indian heritage! This is very discouraging to find that you do not practice what you preach!!!!!

  24. Ray says:

    My wife and I don’t have joint accounts, but we know each other’s balances, etc. We agree to put a certain amount of money for investment every month using dollar cost averaging scheme, I also put a big chunk of my salary into our safety net account.

    Apart from that, we’re free to do what we want with the remaining money in our accounts. So far it’s working really well for us.

  25. StephanieG says:

    One of the benefits of getting married young (while in college) is that neither of us had time to develop financial habits individually. We’ve had joint accounts since becoming engaged–except that originally, there was nothing in them! It’s very easy starting from zero: no debts, no assets, little tiny income. I’ve had the financial reins since I found that he didn’t know how to balance a checkbook (so I took it away from him).

    Sixteen years later, we’ve made some little mistakes (together), really stupid mistakes (together), and some good decisions (together) and it’s just so refreshing to be totally open with finances and on the same page.

  26. Congratulations on this move. My wife and I have been doing this for 30+ years. It’s not always easy. If you look around you will observe that money problems in a marriage are often proxies for deeper issues, particularly as to trust and communications. I can understand funneling an allowance to each spouse to spend as they wish but too many couples maintain separate accounts because of other concerns about the strength and durability of the relationship. It is ironic that some couples can share a bed and children but not their money. Go figure.

  27. frank rizzo says:

    I suppose the choice of checking account is secondary to this post’s topic, but I can’t believe more people don’t consider ETrade for a checking account. No fees, free billpay, free checks and deposit slips, and **NO ATM FEES EVER AGAIN**. They also have decent interest rates for certain balances. The tradeoffs are no local tellers (why do I need this??) and you mail in your checks for deposit. The convenience of going to any ATM I want combined with free billpay seals the deal for me.

  28. Matt says:

    I actually got burned by letting an ex-girlfriend talk me into getting a joint account. The downfall was from not keeping accurate, up to date records (like a balanced checkbook). We also were living on my income only and with both of us drawing from the account it drained quickly.

    I think that if we had been budgeting, COMMUNICATING and keeping records current would have set us up for success.

  29. Todd A says:

    Wow. I didn’t even know that maintaining separate accounts while married was a realistic option. My wife and I have been joint from the beginning, and, while there were bumps along the way, I wouldn’t have it any other way. For better or worse …

  30. Kurt says:

    My wife and I simply setup a joint account that we pay joint bills out of (Mortgage, various types of insurance, utilities, etc.), some of these we split by precise amounts (i.e. car insurance and life insurance), others we split 50/50 or one of us takes care. We dump money into the joint account once a month to cover the upcoming bills and that’s about it (keeps it simple). We each have our own bank accounts from way back when, which are “private” although we generally discuss any large purchases or purchases that aren’t 100% needed (like say a new Palm Z22), this is less about getting permission and more about making sure we’re making a conscious decision about how we spend our money individually and as a couple. It’s all about communications and making agreements we are both happy with (win-win).

  31. Kurt says:

    One other thing to consider, with joint accounts while you may have access you may not be listed as the primary and thus it doesn’t count towards your credit history (which can be good and bad) but I know at least one woman who got a divorce and wasn’t able to qualify for any credit since she had no banking record from after she got married (all the cards/accounts were in her husband’s name). So it’s good to maintain your own account so you have a credit history (which is becoming increasingly important and problematic, your FICO score affects all manner of things).

  32. plonkee says:

    @Todd A (#14):
    Of course it’s a realistic option. Any option that works is a good one.

  33. I am about to get married and this is something I am thinking a lot about. Should or shouldn’t I combine my finances with my wife into just one bank account.
    I am still unsure but thinking through it at the moment. Thanks for your story

  34. Ingo says:

    Seven years into marriage, I am just now adding my wife’s banking/spending details to my GnuCash accounting. I’ve alsways had a pretty good idea of her general situation, but not the details and occasionally I’ve been surprised – by the amount of credit card debt she’d piled up, for example.

    I think we’ll still keep separate accounts (she likes her bank, I like mine – she uses ATM, I use tellers), but just getting an overall focused picture of our combined situation should really help in these leaner times.

    The delay for us to merge has primarily been the privacy issue you stated. I’m an open book, but my wife is more private about her finances and I’ve always respected that. But as others have said, there are ways to both manage the joint money as well as keep ‘private’ slush funds. That’s my goal.

  35. Eric says:

    I have been taking advice from this blog for what must be years. I am very surprised that the what I thought were obvious benefits of joint finances hadn’t been made clear after five years of marriage. I don’t mean this as a negative, just an example of how people can ignore things in their lives. While my wife and I had made our finances joint after a comparatively short period of time we probably waste a great deal of money in some other, but equally as ignored area, probably because that is just how it was always done, or whatever. So, what I mean to say is, congratulations on digging out the details and bringing the blurry reality of the day-to-day into focus.

    E

  36. battra92 says:

    I think legally before someone gets married they should have to take financial counseling classes. It’s quite annoying and depressing at how there are married couples who still can’t handle any sort of finances (I know friends of the family who use cash for 100% of their finances because they could never manage a checkbook.)

    I would talk money and finances with all my past serious girlfriends. Most of them were broke ass daddy’s girls and thought that I was just going to provide infinite shopping money for me.

    Two can live as cheap as one but I’ll pay the difference to stay single and sane. ;)

  37. danielle says:

    DH and I combined finances when we got engaged. It is easy to combine almost zero and almost zero! now, with more $$ coming in, I do the finances/budgeting/investing, we have an open “State of the Union” monthly where we talk about our relationship, $$ whatever. It is very honest and open.

    We don’t fight about money because we set goals together and are on the path together– kind of a revised Dave Ramsey path.

    I am not a fan of separate accounts for married people. Its like you’re playing the same sport but on 2 different teams. But hey, I know tons of people that it does work for. not for us!

  38. Kevin says:

    My wife and I are all joint, but we use a credit card for nearly everything and pay it off each month. That way, both know what has been spent for the month – and it makes the accounting much easier for me to track in Quicken. No worrying about bouncing anything due to forgotten ATM withdrawals or debit transactions.

  39. reulte says:

    JReed -#10 — Actually, I don’t think that every state automatically assumes joint money (or community property). I believe it depends upon various facts such as if accounts are mingled or if the money is a gift to one partner.

    Unromatic as it seems, I’m all for a pre-nuptual (or even a post-nup) – especially if you haven’t had that embaressing money conversation with your partner.

  40. Heidi says:

    My question is WHEN to start communicating so openly about finances.

    I have a boyfriend whom I have been dating for about 9 months. We’re starting to get more serious, but not to the point where we’re thinking of getting married or moving in together. But if we get there, I’ll be embarassed to tell him that I have both credit card debt and student loans. The CCs should be paid off in the next 11 months; is it realistic to try to hide that debt until it’s gone?

    This was never an issue with my ex-fiance because he also had some debt, so the shame factor wasn’t really there. However, the current BF is from a seriously wealthy family (think boarding schools, maids, and traveling abroad for a long weekend just because he feels like it), and I’m afraid he just wouldn’t understand… and worse yet, that he would judge me negatively for the debt. My sister’s marriage failed in part due to her ex-husband’s opinion of her debt and what he thought it implied not only about her but about how our parents raised her. Admitedly he was an ass, but I’m scarred by that situation now.

    I want to let the BF know when the time is right: I don’t want to do it prematurely, but I don’t want to wait so long that he thinks I’ve been lying to him. Can anybody make a recommendation?

  41. CAgirl says:

    We’re debating if we should get joint accounts when we get married next year. We’ve been living together for a year now and have a system that works well for us. I make more than he does so I cover 55% of the rent and 60% of the utilities, but we split groceries, entertainment and dinners out equally. We have separate checking accounts and separate savings, but we did just open one joint savings to save for a house. I handle all of the bills and keep track of what his share is for the utilities. He gives me all receipts so I keep a running tally of who owes how much depending on utilities and grocery bills. Every once in awhile if the total is too high, whoever is in the red will pay off their share, but usually we just keep track so if I owe him due to large grocery bills, I might cover the next few grocery runs to bring it even. We keep the rent apart from that tally; he just gives me a check once a month for his share of the rent. Debating on opening a joint account, but since I have substantially more debt, not sure how it would work.

  42. katy says:

    well, i’ve been divorced, and my husband/best friend wiped out our joint checking account when i told him i wanted a divorce. i couldn’t buy groceries without a credit card. big mistake closeing our my checking and savings accounts to joint checking with that scumbag.

    now remarried for over umpteen years, we each have our own checking and savings. i give him case for rent and other expenses and he does the same. just easier.

  43. katy says:

    not case, cash.

    people, don’t be fools. don’t close your checking or savings accounts and put all your money into an account with anyone.

  44. Kate in Canada says:

    What works for my partner and me is a bit of both … the mortgage account, savings account and HELOC are joint, we each have our own chequing accounts, and each month I tell him how much the utilities bills are and he puts an equal amount into the “groceries/pets/household” jar. What we do NOT have – and never will – is shared/joint credit cards, because we have such totally different feelings about them. He uses his a lot because he finds them more convenient than cash, where mine (and I have only one) lives in the back of my wallet and is for true emergencies only. It’s not a system that would work for every couple, but it’s been working well for us for almost thirty years.

  45. danielle says:

    Unromatic as it seems, I’m all for a pre-nuptual (or even a post-nup) – especially if you haven’t had that embaressing money conversation with your partner.

    reulte @ 8:18 am September 8th, 2008 (comment #20)

    Um, if you haven’t had that “embarassing money conversation” you aren’t ready to get married!

  46. Dawn says:

    I am all for “whatever works” for each couple. Having been divorced, I am a strong proponent of good conversation and honesty, but I am not sure I would ever co-mingle all my finances again. That’s just me though, and I know a lot of people have made it work.

  47. BonzoGal says:

    “I am not a fan of separate accounts for married people. Its like you’re playing the same sport but on 2 different teams.”

    I don’t agree at all- my husband and I have separate checking and a joint savings. We have regular financial discussions and pay for purchases together. We have zero arguments about money. We’re both business people and enjoy having control over our own finances. He buys his things, I buy mine, and we buy ours. Rather than “same sport, 2 teams” it’s like “different players on the same team.”

  48. guinness416 says:

    Aye, aye BonzoGal. I certainly don’t have the time or inclination to micro-manage how much my husband spent on beer or groceries or whatever last month. As long as we both deposit our agreed percentage into (joint) savings/investments and the bills we respectively take care of get paid, our system works fine. But we don’t have any debt but the mortgage, or a history as adults of being irresponsible with money; maybe that makes us slightly more laissez faire.

    Regardless, you don’t need to be “a fan” of any system; just do what works for you and respect others’ methods.

  49. reulte says:

    Danielle – #23 Very true — but that doesn’t seem to stop many people.

  50. reulte says:

    Sorry – that should be Danielle – #45

  51. reulte says:

    Heidi – #40 — At some point make a comment that concentrates on your achievement of paying off the bill rather then a ‘confession’ of debt. Maybe something like, “I love paying off this bill (waving envelope with enclosed check or pointing to computer screen) it gets me so much closer to being out of debt.” Don’t let him pay off so much as a penny. This is your debt and your accomplishment when you finish paying it. Don’t get into a serious conversion about debt at that time. That isn’t your intent; your intent is to (1) let him know that you have some debt and (2) that you’re interested in paying off your debt by yourself and (3) signal your interest in revealing more of your private life (money is about as private as many people get).

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