Money Talk: How to Manage Finances in Marriage
Learning how to manage finances in marriage is an important skill. It can help save your marriage or avoid fights about money and marriage. Money is a critical factor in most marriages, so it's imperative to understand how to budget as a couple.
One Size Does Not Fit All: Money and Marriage
There isn't a right or wrong way to manage money in a marriage. What's right for you might not be suitable for another couple - and that's okay! The key is to figure out what works for you and your spouse.
4 Ways to Manage Marriage and Finances
In any marriage, there are different ways to manage money. The key is to figure out which way to manage your money and be on the same page. Talk to your spouse about your thoughts on spending habits, saving money, and how to manage money as a couple to determine what's right for you.
Here are four ways to handle money in a marriage.
1. Combine It All
You and your spouse may choose to combine finances completely. This simplifies handling the bills and expenses because everything comes from one account and is family money.
The key to making this work is to have a joint checking account and/or joint savings account that both partners have access to and have a say in how it's handled.
You can assign one partner to handle paying the bills if that works best for you, or you can split them evenly, and both have a role in managing money.
To make a joint account work for you, it's best if the following is true:
You have similar views about spending money (or at least views that are able to coexist)
You agree on the importance of savings accounts and emergency funds
You are okay with both partners having access to the account
You can create a spending threshold (i.e. a dollar amount) that enables each partner to spend without permission up to a certain point
2. Completely Separate
You may consider keeping your finances separate if you aren't on the same team financially or want to maintain financial independence. This may make you feel more financially secure, but it comes with its challenges.
First, you must determine who will handle the bills. If you have shared expenses, you must determine how to split them or decide who will be responsible.
The key to having separate accounts is to communicate regularly. For example, it's easy for joint bills to get overlooked if you don't track who is responsible for each one. Talk openly about your finances even without combining your funds, and you’ll have the best shot to make it work.
When you make spending decisions, be sure you think about your responsibilities. Even if you don't have to ask your spouse to spend money, you must have enough to cover the bills you're responsible for paying.
3. Combination
There's also the option to combine finances and have separate accounts. Here are a few ways.
A 50/50 Split: Mine, Yours, Ours - If you split the shared bills 50/50, you can combine finances up to the amount you're responsible for paying, as would your spouse. The remaining funds are yours to keep in separate accounts.
Split by Percentages Based on Partner Incomes - If one partner makes more money than the other, consider a percentage-based split. For example, if you make 45% of the household income and your spouse makes 55%, you'd pay 45% of the shared expenses, and your spouse would pay 55%.
Give Responsibilities to Each Partner - If you'd rather not play the numbers game or want your own personal accounts, consider assigning specific bills to each partner. For example, you might take the housing bills, and your spouse will take the food and insurance bills.
4. One Income Household
If you are a one-income household or want to live like you are, make all bills fit within one income. Then, if you have a second income, you can use it to save money or reach other financial goals.
This method ensures you are on the same team and learn to live frugally by only using one income.
Joint vs. Separate Accounts
As you decide how to manage money jointly, you must determine if you want joint or separate accounts.
Both options have pros and cons; you must decide what works best for your marriage. If you're combining your finances, you'll likely have joint accounts because it's easier. Both partners have equal access to the funds.
However, if you're doing a combination or keeping separate accounts, you may not join money at all or only join a portion of your funds.
Keep in mind if you keep separate accounts, you can only manage your money, not your spouse's. This can cause more issues for married couples, including the risk of financial infidelity or lying, as well as anxiety from being unaware of how your spouse or significant other is doing financially.
Before the Wedding
If you aren't married yet, consider these steps to take control of your personal finance and feel on the same page with your soon-to-be spouse.
Check-in and Share Your Financial Situation
Don't be afraid to share your financial situation with your partner. No matter how good or bad it is, share the details. This ensures you understand each other and can create a seamless financial picture.
If you lie about your finances or aren't upfront about your debt or assets, it could cause problems later. This is the perfect time to check in with one another and discuss your finances peacefully.
Be Transparent About All Debts
Again, don't hide your debts; nothing good comes from it. Be honest with one another about any significant debt you carry. You can create a plan to pay the debt off together, but this is only possible if you each clearly understand each other’s debts.
Start a Wedding Fund
A wedding fund can be your first opportunity to handle shared finances. Together, create a plan to save money for your wedding by determining your financial goals, how much you must save, and how you'll go about it.
Saving and sharing a wedding fund is like a trial run to handling marriage and money. Consider yourself ahead of the game if you manage to have enough savings to reach your wedding goals.
Plan How You Will Merge Your Finances
After sharing your financial situation, debt, and planning how you'll save up for a wedding fund, it's time to deal with the financial part of marriage. Talk about how you'll combine finances, if you'll share or split certain bills, establish retirement accounts, and if you'll have one joint account or separate accounts.
Start Budgeting as a Couple
After deciding how you'll merge your finances, it's time to start budgeting. This can seem intimidating, especially if it's your first time, but if you work on it together, within a few months you'll have a budget that works for you.
Remember that budgeting for couples can take some trial and error, especially for a newly married couple. So give yourself some grace, and try different things until you've worked out a budget that works for both of you and doesn't cause money problems in marriage.
After the Wedding Day
After one of the biggest days of your life, it's time to get serious about your bank accounts, bills, and savings. This is when all the planning comes together, and you put your money habits to the test.
Implement How You Will Manage and Share Money
Remember the plans you created before the wedding regarding how you'll combine finances and budget? Put all that work to the test by implementing it into your marriage.
This may take a little time, especially if you need to open a joint bank account or tweak your partner's spending habits. Again, give yourself grace and allow mistakes. Use them as lessons to learn from, and use the financial tips you learn along the way to make things work right.
Update Your Beneficiary Information
After marrying, be sure to change your beneficiary information on any bank and personal accounts. If your spouse isn't named as a beneficiary on your bank accounts, they may be unable to access them upon your death (at least without having to go with the probate legal process). Don't take that chance.
Update Name Change Details On Accounts
If you've changed your name, update your driver's license and then use it to change the name on your bank accounts and other important accounts.
Determine and Update Your Tax Statuses
After getting married, it's a great time to sit down with your tax advisor to determine how you'll file your taxes. If necessary, change your W-4s at work to reflect the changes.
Create a Plan for Ongoing and Healthy Financial Conversation
Setting up money dates to avoid relationship problems regarding money is not a bad idea. Money dates are time you set aside to talk to one another about your shared goals, finances, and even your relationship. Setting this up early in the relationship makes feeling good about your finances much easier.
5 Tips for Successfully Balancing Money and Relationships
To avoid money issues in marriage, consider these five tips.
1. Display Trust and Fairness - Avoid pointing fingers or passing blame. Instead, show that you trust your partner and are willing to meet on middle ground to make managing family finances easy.
2. Set Clear Boundaries - Together, create boundaries that you both must follow. Let both partners have a say, and be sure you're in agreement so one partner doesn't feel compelled to violate them.
3. Ensure Equality Across the Board - Even if one spouse has a higher income than another, it doesn't give them more rights than the other. Treat both partners equally when dealing with your finances, both having a say in the household’s financial decision making.
4. Make the Process of Combining Gradual - If you want a joint account, take it slow. For example, don't combine all money at once. Take it slow, and be sure you both feel comfortable.
5. Create Goals Together - Create individual and joint goals to help you have more freedom and enjoy goals together in marriage. Letting both partners have a say in how you save and spend money creates a more cohesive relationship.
The Bottom Line - How to Manage Finances in a Marriage
Learning how to manage money in a marriage can feel overwhelming, but with the right help, it's possible. Start the conversation as early as possible in your relationship, and if you need help, consider financial counseling to help you get control of your money and marriage.
Want to level up your game around money in your relationship? My free quiz will help you learn your Couple’s Money Personality Type AND how you can grow from there!
Adam Kol is The Couples Financial Coach. He helps couples go from financial overwhelm or fighting to clarity, teamwork, and peace of mind.
Adam is a Certified Financial Therapist-I™, Certified Mediator, and Tax Attorney with a Duke Law degree and a Master's in Tax Law from NYU. He is a husband, dad, and musician, as well.
Adam's wisdom has been shared with The Wall Street Journal, the Baltimore Ravens, CNBC, NewsNation, and more.
