Updated on 12.28.09

Merge Left

Trent Hamm

Charlene writes in:

I’m getting married in March. My future husband and I are talking about when and how to merge our finances and we’ve had some difficulty coming up with a plan. What did you and your wife do? What would you suggest for other couples on the cusp of marriage?

First of all, I’ll point out that when my wife and I were first married, neither one of us had any clue about how to manage our money. We basically left all of our accounts the same, keeping accounts and direct deposits at separate banks and without any sort of shared savings or checking accounts. This worked for us for a while, but it had serious disadvantages, chief among them the fact that it was hard for either one of us to really get a grip on what our true financial situation was.

I would not recommend doing that unless you have a very good, clear reason for doing so. It’s very clear in that wonderful 20/20 hindsight that the disadvantages of such a split far outweigh the advantages.

Instead, I would fold your accounts together at whichever bank the two of you already use that offers the best customer service. Don’t worry about things like savings rates and such for your primary accounts – if you want to seek out a great savings rate, seek that out separately and use a second bank for your savings purposes. The most important factors on your primary checking account and bank services are the customer service provided to you and the lack of fees on the account for various things (keeping the account open, ATM use, and so on).

I would not do this until you’re married, but I would follow through with the plan pretty quickly after you’re married. Before you’re married, you’re basically opening yourself up to the potential for a very sticky situation without any real benefit other than just a bit of short term convenience.

Instead, invest your time coming up with a detailed plan before the wedding so that you can just quickly execute it after the marriage, getting your affairs in order as quickly as possible.

You may also want to consider a prenupital agreement. You may be deeply in love right now, but people can and do change. A prenupital agreement makes any divorce process that may happen much simpler and less fraught witn anger and emotion, both of which you can surely live without in such a situation. If you find agreeing on a prenupital agrangement is difficult, you may want to step back and have some discussions about why this is – and what that might mean for your relationship.

Another thing worth considering is life insurance. Now that you’re merging your financial lives, you may find yourself investing in things that you may not be able to afford individually, like a home, more expensive cars, or children. A term life insurance policy can ensure that your partner is not stuck in an incredibly difficult financial situation should you pass away unexpectedly. Even if you don’t have such expenses now, term life insurance is still worth considering because the cost of a policy is much lower when you’re young than when you’re older (or have pre-existing conditions that may be discovered later on).

It might seem strange at first glance to suggest this as financial advice, but I would strongly encourage you to have discussions about such issues as having children now rather than after you’re married. If you have differing feelings on such key issues and haven’t come to an understanding about them (and trust me, quite often one side thinks there’s an “understanding” and the other side does not), they can fester within a marriage, turning a loving situation into something painful and often quite financially costly for everyone involved (well, except for the lawyers – they clean up). Talk things through – items such as future career plans, dreams, ambitions, children, and so on should be discussed and understood and both partners should at least understand each other’s positions, even if they’re not fully on the same page.

Marriage isn’t something that benefits from being entered into lightly. Merging your accounts is just the first step – you’re often merging lives in ways you never even considered before. Take the time now to at least consider these changes – and talk about them – before you take the plunge.

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  1. Paul says:

    Talk money NOW. Make sure you are on the same page when it comes to your philosophy and your goals. If one of you wants to build your net worth as quickly as possible so you can retire at 50, and the other wants to build net worth more slowly and spend more now, you need to know that and work it out.

    (I’m not judging either of those approaches, I think as long as you get out of debt and live beneath your means you’ll be fine).

    Combining all your accounts is pretty easy, and I agree, stick with the bank/credit card/whatever that provides the best service or value to you.

  2. marta says:

    Heads-up: it’s spelled prenupTIAL, not prenupITAL. This error occurs three times — using a spell checker would have avoided that.

    As for the actual article, I think I probably would have just one shared account for regular expenses, bills and such, and keep separate finances/accounts for the rest. But YMMV.

  3. Johanna says:

    Caveat: I am not a lawyer, nor have I ever been married.

    But advice I’ve heard, that seems sensible to me, is to leave your individual accounts and investments as they are, and open a new joint account into which you can deposit all (or some) of your future earnings.

  4. Ben says:

    As far as insurance, make sure to take into account your incomes and expenses. If you make 2x as much as your spouse, your insurance should be half as much or, depending, forgo insurance because you can pay the bills without your spouses income.

    I married nearly 16 months ago and we decided against a prenuptial agreement. Trent is right, people can and do change, but half the point of the commitment that you will be making with each other is to change together.

    If more married people did that, our society would be much more stable financially speaking.

    Finally, it’s GREAT that you are talking about money, kids as Trent suggested, etc. now!

  5. Zella says:

    Also, go ahead and make a list for the other person of your individual accounts and access information– you don’t need to provide it until after marriage, but at least you’ll have it ready. Even if you’re not married or don’t plan to get married, at least give it to someone else/put it in a safety deposit box so someone you trust could have access to your information in the event that you’re incapacitated.

    If there’s a name change involved, I definitely recommend waiting until that’s completely sorted out before you change banks, etc. Trust me, it’s a complete headache, so take a couple of days to get it done all at once. I’ve informed my husband that he’s stuck with me forever, if for no other reason than the fact that I do NOT want to deal with a name change again ;)

  6. Lauren says:

    My husband and I just married 4 months ago, and we have yet to fully combine our finanaces. We did open a few joint savings accounts for long-term planning – a vacation fund, a bigger house fund, and a maternity fund for when we decide to have children. I also added my husband to my emergency fund, so it is now our emergency fund. I make quite a bit more than my husband and already owned a home, so I pay the mortgage, utilities, and insurance, which all come directly out of my checking account. My husband typicaly pays when we go out to eat or do social activites. We each pay for our own cars and student loans. It’s working for us right now. We are both fairly frugal naturally and have never had any credit card debt. I don’t think there is one right answer to combining finances.

  7. kat says:

    some friends have a great system, they have 4 checking accounts, ours, car, his and hers. Each spouse contributes half of their earnings to ours, a quarter to car, and a quarter their personal account. The car account gets more than needed and the extra funds are moved to savings monthly. The rule is that they can spend what is in the personal account however they wish to. Their incomes are fairly equal, so this works well for them. He spends his on fishing stuff, and she spends hers on fabric. Neither one feels that their hobby is being neglected or funds are being used unfairly.

  8. momof4 says:

    We were young and naive when we married and just combined all of our finances right away. Fortunately we didn’t have much and had a common goal for where we wanted to be and money has never been an issue that we fight over. One thing we did do was make sure each of us had some spending money of our own that we didn’t have to ask permission to use. That goes a long way toward keeping the peace.

  9. Stacey says:

    I agree with Zella – set aside a day or two to go to the Social Security Office if you’re changing your name. Then you’ll be set to open/transfer accounts at the bank under a joint account, if you choose to do so. There’s nothing worse than combining and transfering accounts before the wedding, only to have to make a second trip to update your name on all the accounts. Plus if you order checks, you’ll obviously want the correct name on the account.

    We did what Trent suggested and kept our separate accounts open for the first year. We soon realized that one checking and savings account worked better for our situation. But if it’s not costing you anything, by all means keep everything available. The only separate accounts you need are credit accounts – if a spouse should leave or pass away, you’ll be happier knowing that both partners have a solid credit score.

  10. guinness416 says:

    The question’s more than a bit vague – what age are they? do they have any major assets? do they live together? are they already on each other’s health insurance/life insurance etc? It’s impossible to answer the question without those sort of details.

  11. asithi says:

    We each have an individual checking account and a joint checking account. Since I make more than my husband, I pay all the bills and the mortgage. My husband pays for food and gas. One of my husband’s monthly paycheck goes into our joint account, which funds our emergency funds and long term savings.

    It works for us because we have our own spending money. If I find some ways to save money on our bills, then I get a little more spending money. If my husband find some ways to save money on our grocery and gas, then he has a little spending money. This system works well for us because it makes us feel like we have some control.

  12. Amateur says:

    I agree with the comments on having separate spending cash for harmony reasons. Some couples can engage in good discussions on how to spend money and where to spend it, but others may feel like it’s micromanagement and lack of control over little things.

  13. Alison says:

    @kat #7, that is pretty much how we do it (married 8 months) and i cant tell you the value in each of us still having our own flex money. no guilt, no bickering on budgets, its all discretionary.

    One thing i have noticed since i am the budget-er & bookkeeper of our accounts is how it is up to me to discuss the plans, changes and forecasts of the bills and savings. I always feel like a CFO bringing info to the board, and i like getting feedback and input to know that we share our goals.

  14. MegB says:

    My husband and I combined everything shortly after we got married, almost four years ago. We were in our mid 30s when we got married and both had been living on our own for quite some time. We had several discussions before our marriage about finances, and to this day we have never really had an argument about money. If you put everything together and lay everything out on the table, you are on the same page from the get go. To me, that is so important.

    That being said, I also think that it’s important for each of you to have a “job” when it comes to managing your finances. For example, in our marriage, I am responsible for balancing and monitoring our checkbook and budget, although we have regular meetings about where everything stands. Likewise, my husband’s job is to manage and monitor our investments and keep tabs on our insurance. Again, though, we have periodic meetings about it.

    You are so wise to have given this some thought BEFORE your marriage, and I am sure your marriage will be all the stronger because of that.

  15. Emily says:

    We have been married 10 years and have tried various forms of handling our finances.

    What we do is each of us gets an “allowance” every week and the rest goes into the general fund. We dont’ really address who makes more or who contributes more to our household income, we all get the same.

    It works for us.

  16. Zella says:

    I’ll expand a little on how we did it. We had separate accounts prior to marriage, but had access to the others’ accounts, as we had been living together for years (yes, health insurance did tip me over the edge of marriage).

    After 6 months, we combined accounts into a single checking and single savings account (for primary stuff). We’ve since switched banks, but we have maintained the same structure; pretty much everything is joint at this point in time and while we don’t have an explicit set amount of spending money, anything that doesn’t fall into food/gas gets discussed beforehand.

    For balance, MegB in #14 has it split the same way we do– my husband handles the monthly, I handle the long term.

    Also, I would add one item that we’ve come up with– build a goal worksheet, with an individual list of short, medium and long term dreams/goals, and then build a joint one. It isn’t so much the negotiation, but finding out what you really, really deeply value and then figuring out how to fit them in your life, fiscally and time-wise.

  17. Joanna says:

    Ah, one last thing. I agree on the spending money. We each have a monthly “allowance” that we take out in cash at the beginning of each month. It’s totally not monitored by the other. It’s fun to see how we each have handled it. So far, he ALWAYS has $$ at end of month and I NEVER do. I have my eye on a couple of things, though, that I’ll be saving up for.

    AND, don’t forget to talk about giving. Trent talks about it some, but personally, I don’t think you can overestimate its importance.

  18. Little House says:

    @Zella- has a really good point. Even if you and your spouse or significant other decide not to share accounts, you at least need to have access to those accounts in case of emergencies. Out of Debt again calls it the “Alien Abduction Plan.” For instance, I handle all the bill paying which I mostly do online. My husband really doesn’t know when to pay the bills, so I’ve outlined a “…just in case” scenario so that he could take over if he had to which includes what bills I pay, user names and passwords, etc. We also have sat down and worked together on our finances, but this took us a few years to get the hang of (we’ve been married 9 years). We have always shared accounts, it’s just been easier to manage this way.

  19. Michael says:

    Stopgap solution:

    Use Mint.com or a similar program — you can view all of both your account info from one place and it doesn’t matter where the money came from, it still gets categorized as “car” or “Rent” or whatever.

    Longer term (months to year(s)):

    Wait till you’re married, have moved in to your new place and have your docs with your new name on it. That way you only have to make changes once.

    We kept separate accounts for a short while, but since I was earning most of the money we soon added my wife to my account and got her a debit/credit card attached to my account.She did most of the shopping, grocery and otherwise, and this was more convenient.

    Once she was on my account, her account didn’t see much action and after she switched jobs, there really wasn’t much point keeping her account open any more.

    Really, our single accounts just kind of atrophied and died off, just like our single friends who didn’t like being around both of us…

  20. Sandy says:

    One other thing I would suggest is to review your Beneficiaries on IRAs and 401(k)s, as well as insurance statements. A few years after our marriage, my husband was reviewing his statements and found that his mother was still the beneficiary on one of his accounts. A small account, but nevertheless something he overlooked.

  21. Whoa, there IS a benefit to keeping accounts separate…a big one.

    In many states, if a spouse begins to pay down premarital debt incurred by the other spouse, the company CAN consider the non-debted spouse to be accepting legal responsibility for repayment of the debt.

    …which is no big deal if you never get divorced but I think the divorce rate speaks for itself.

    Also, using a joint checking account to pay for joint items (like a mortgage) reinforces the idea that both partners are equal equity partners.

    In the event of a divorce, the court will often look at the financial paper trail for payment, etc. to determine ownership or percent of ownership for post-marital distribution.

    My husband and I had separate accounts and a joint account for the first 3 years of our marriage. Once we got rid of our debt, the individual accounts were no longer necessary but we still have them because our individual bank accounts happen to be the accounts with the longest history.

    …which is a key component of your credit score!

    I appreciate your financial advice but in this instance there are legal and financial ramifications that you haven’t considered.

    I DO love that you have suggested a prenuptial agreement. That is a fantastic idea!

  22. Stacey says:

    Hayden, if by “bank accounts” you mean savings and checking accounts… they don’t affect your credit score. They won’t appear on your credit report, either. Only credit accounts (credit cards and loans, not debit cards) will appear on your credit report and score.

    If by “bank accounts” you mean credit cards, then by all means I agree with you. :-) Length of history is a huge part of your credit score.

  23. Candi says:

    My husband and I maintain completely seperate accounts. We can thank his ex-wife for this. She left him with abour 15,000$ of unpaid credit card debt in his name that she had taken out when he was deployed. So no merging of finances for us.

  24. Erika says:

    I think a lot of the decisions depend on where in life a couple is when they get married. A well-established career, a trust fund, homes, great debt, or a child from a previous relationship can complicate or change how a couple wishes to merge their lives. My husband and I were both young, relatively new in our careers, and with no debt. That makes it very easy to combine everything. One thing we did that I’d recommend is to discuss everything. We talked and talked about career goals, finances, pets, number of children, how we were going to raise our children, where we wanted to live, and even recreational activities. Not that we stick exactly to what we said prior to marriage (life does change), but it did place us on the same page and made us both aware to places of potential conflict.

  25. prodgod says:

    I have often wondered if there’s any correlation between planning for a divorce and ending up with one. In other words, is one more likely to divorce if they have always seen that as a possible “out” down the road? Not sure if that makes sense, but if you completely take it off the table as a viable option, doesn’t that pretty much force you to work out potential conflicts? To me, a pre-nup is rather like buying a bail bond “in case” you wind up in jail; I suppose it’s wise if you see that in your future, but shouldn’t we aim higher?

  26. Bill says:

    We share our money 100% but I’ve always wondered about the separate account folks, if we divide up the bills based on percentage, we would end up with the same percentage left. However I make 70K more than my wife so if we each are left with 10% of our incomes after bills, I’m going to have a much better life than her. Do I ride in the front of the plane and she rides in the back? or does she stay down the street in the 3 star hotel?

    How do these couples decide for one to stay home and raise the kids? Does this spouse go on welfare?

    If you get divorced you will find you are much more connected legally than you are behaving. The judge will not care one of you paid 70% of the mortgage if both of your names are on it.

  27. @Stacey – You are completely correct. The length of time is NOT included in calculating the credit score when it comes to bank accounts. If, however, you overdraft on your account and it is turned over to a collection agency THAT will show up on your report and effect your score.

  28. deRuiter says:

    Lots of marriages end in divorce. A prenup. arrangement is a must if one partner has substantial assets and the other does not. If things look rocky at any time, and one spouse inherits a substantial asset, DO NOT COMINGLE THAT ASSET. For CDs and similar assets make them POD (payable on death) to the other spouse so that he/she can get their hands on the money immediately without probate although you might reconsider if you see him/her sowing a patch of hemlock in the herb garden! Children from a prior marriage also have to be considered financially and consider how much time the new spouse will spend with the old family. IF YOU HAVE NOT DISCUSSED WHETHER TO HAVE CHILDREN, WHEN TO HAVE CHILDREN, HOW MANY CHILDREN TO HAVE, WHAT RELIGION THE CHILDREN WILL BE RAISED AND HOW OFTEN YOU WILL PRACTICE YOUR RELIGION, YOU’RE NOT READY TO WALK DOWN THE ISLE. Also a police check, unless you’ve known each other since thrid grade, and a credit check, are CRUCIAL. If there is any history of domestic vilolnce, child abuse, repeated criminal tendencies, DON’T MARRY HIM / HER AS THE PERSON WILL NOT CHANGE. Also if you are marrying som exotic foreigner and you have children, be aware that he/she may get in a snit and take your chidlren legally to visit his / her realtives in another country and you will never get them back. Certain religious affiliations are more prone to this as they decide that they do not want their children raised in a “decadent Western culture.” Just a few thoughts before you take the big step, and I wish you all good luck!

  29. Some thoughts on money-mingling…
    I know Trent is from a stable-job backround and his wife still works, so they are in what I call the ‘normal’ situation. For these type of folks, co-mingling probably works. I also have a good friend who got married just over a year ago, and they do something similar to others who have commented – joint account for bills, seperate personal for spending. There is an income divide there since he is a programmer and she a teacher. That way, they each have the discretion to spend others mentioned.
    But as others have pointed-out there are downsides to co-mingling. Trent may never come across this with just his blogging, but hopefully he reads this! :-)
    I started a company in 2002 that I recently shut-down due to incurring more debt than I could hope to pay off. Stiffed by a large client and late-pay, blah blah. Any rate, since I had signed a personal guarantee on one of the debts, they went after me. Having a joint checking account meant that all those assets were available, not just my share. (Which was nothing, since I wasn’t working)
    In addition to all the other considerations of child-rearing styles, religion, long-term goals for retirement, etc. you should seriously assess if self-employment/franchising/coaching is a career goal. When it becomes a factor, (like, when one of you opens the business) I highly recommend separate accounts *before* it becomes an issue! For purposes of bankruptcy and other nasty but-not-unlikely things, moving funds at the wrong time can seriously hurt you.

    I don’t have one, but I firmly believe in the pre-nup under the right circumstances – i.e. un-even financial situation upon marriage. It’s not planning for a future divorce that’s written in stone any more than buying life insurance is planning to have an accident. In fact, if you *don’t* do it, it’ll probably be an issue. Just like when you forget your umbrella, it rains. :-)
    My personal viewpoint would be that if my new husband/wife made money on their own without my involvement, I’m no more entitled to it than anyone else. Upon divorce I would get a substantial amount of it, depending on the state you live in, so a pre-nup just helps to protect against that. People who fight against having that taken away are usual referred to as “gold-diggers”. Unfortunately for folks with money, dealing with that prospect is an ugly, but necessary evil.

  30. Chris says:

    Here’s what my long-term boyfriend (and legal domestic partner) do.

    When we moved in together, we opened a joint checking account, originally just to direct-deposit our halves of the rent/utilities into. We try to over-estimate this amount by about $100 each paycheck to build up joint savings. We still have personal accounts. The joint account has also become a pool that we buy groceries, pay off our joint phone plan, etc., from). We earn almost identical wages, but my paycheck is corporate/steady and his varies wildly from week-to-week.

    Eventually, because I brought debt into the relationship and he’s debt-free (he has no student loans or credit cards—but also no credit history), he asked me to reduce my contribution to the joint account by $200/month and focus on paying down my prior personal debt. So right now, just over a year into our domestic bliss, I’m only two paychecks away from being debt-free, too!

  31. Kevin M says:

    I would definitely start discussing it now, but ultimately do what works best for you…combining accounts or leaving them separate probably won’t make a bit of difference if you end up divorcing. Talking points would be spending habits, savings goals, housing, kids, retirement. You’ve probably (hopefully) done some of this already, but talking specifically can really help see your partner’s motivation.

    Don’t be afraid to try different things. My wife and I immediately combined checking accounts because it was easier to pay all the household bills and not to have to track 3 checking accounts. We kept separate credit cards for daily expenses for awhile, but eventually switched to the same one for convenience and reward program. That may not work for you.

    I like keeping track of that stuff so it was natural for me to do so. I handle the nitty-gritty daily stuff and give her a recap at the end of the month. If we’re getting out of control on budget, we discuss solutions.

  32. JP says:

    I think it really depends on the people involved. My wife and I have been married for 6 months but dated for 6 years before marriage. We are in our early 30’s and both had a house before we married. I also bought a house a year or so before we were married (or engaged) and we currently live in that house and rent our other 2 houses.

    I make more money and also handle the rentals – pay the payments if they arent rented, etc. I pay the house payment and she pays all the utilities, taxes and insurance. This works out to a fair % of salary even though I actually pay more per month than she does (of course I make more as well)

    As for the other “stuff” I usually pick up dinner but she will as well every now and then. I pay for her ROTH IRA because I want us to have a good retirement and yet we each all have our spending money.

    The fact is there is a certain amount of money within a household independant of who makes the money. My wife had debt coming into the marriage and I was debt free (outside of our houses).

    Anyway long story short – we know all the bills have to be paid and both of us are actually good savers – know who you marry and do what makes you happy so money doesn’t become an issue

  33. Georgia says:

    My husband and I were in our late 20’s when we married and both had good jobs for the times. We were each $500 in debt (his a car loan & mine a job move to Chicago). I paid for anything needing a check and he paid all the cash bills and expenses. We never discussed it or argued about it. It just worked out that way.

    Through the years we always had joint accounts, no individual. We always tried, when we could afford it, to have separate money to spend. Sometimes it was only $10 a month. But it helped us to not feel so poor. I also took care of all the bill paying, financial planning, etc.

    In later years we still had only joint accounts, in separate banks and each of us used only one of them, but we still could have written checks on them. In mine I put my paycheck and my husband put in an amount we decided would help us pay all our bills. We each kept a separate amount to spend as we wished. In much later years, he went on SS & had a small pension. The SS was directly deposited into my joint acct. and he kept his pension to spend as he wished and pay for his vehicle expenses & food. (I lived p/t 90 miles away and I also paid for my own expenses.) He also had a joint account with his mother & later a brother after she died. Luckily, he was smart enough, when said brother died, to add my name to the account.

    We never considered a prenup, mainly because it was not really the “in” thing in the early 60’s. But he had been through one divorce (he didn’t want it) and wouldn’t even consider a 2nd. I was against divorce for religious reasons. We both were determined to work on our marriage, and after 2 kids and 44+ years, we did fine. And, believe me, there were plenty of conflicts to work out. We worked them out.

  34. Krista says:

    Like Melody I agree that the ‘normal’ couple would do best with joint accounts. For us it worked best to keep separate accounts. My husband was previously married and we thought it was best to keep all our money separate for child support reasons. I am really glad that we did this because over this last year my husband’s business failed and the company owed a lot of money. Since our accounts were separate the creditors could not go after the money I was making, and my credit was not negatively effected.

    We do have all our finances on Quicken where we can combine everything and hold each other accountable for our spending.

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