Years ago a married couple needed to have a joint account, share and use credit cards as a couple, and also have a joint mortgage with their names. As time has gone by, things have become a little complicated as man and his wife are now working and their income sources are not usually the same. Also, people are now getting married much older and financially established before they're married and merging finances once they have married becomes a complicated issue.
In case you are wondering whether to merge finances or not, there is no one way to it. There are different solutions and some might work for you or not. Nonetheless, it highly depends on the spouses' financial footing, trust and how saving and spending habits differ or blend.
Money Issues on the Table
Among couples, money has always been a big problem and very few even realize it. Newlyweds need to realize the issue of money is big and important and ensure it is on the table for discussion. Newlyweds need to also start their financial management right away by coming up with financial goals for a couple of months or years at the beginning of the marriage.
It is very hard for anyone to tell his or her newlywed spouse about a thousand dollar loan or credit card debt. This is even hard to let out before a marriage. However, it is better the issue is discussed before going down the aisle. Beginning a life together with both or one of the partners being dishonest is not wise. Also, it will be disheartening to your spouse to realize years or months down the line that the reason you cannot access a mortgage is because of a poor credit score. Meet where both of you share the serious, the hilarious and the mundane and talk matters finance; lay everything on the table.
Set Up a Budget
After laying down your financial issues, plan out a household budget. This is a very important budget since it ensures every dollar made by the couple has been planned for. However, even as you might want to be stringent, allow some money to each one of that you hardly need to account for. This amount varies from one couple to the next. The important thing is to ensure the budget is allowing you to meet the entire household's obligations, get out of debt and helps you to save.
Have Clear Financial Goals
It is very important to ensure your goals have been set together. Such goals will give you the goodwill to talk smoothly about money. In turn, the couple will remain focused and to remain afloat during tough times. For example, you can make a goal of saving two million dollars for your retirement, save enough for a business or to retire at a specific age or save enough to buy a piece of property or car. It is also important to think about financial goals especially if you have children or you are thinking of having a couple of them. In case one spouse will be staying home, adjusting finances in a way that such a matter is accommodated is very important. Another goal is saving to further your education or save for the future of your kids' college education.
Weekly or Monthly Budget Discussions
It is also important to have weekly, biweekly or monthly budget meetings. Come up with a unique system that helps you look and plan for the amount left in your checking account. With budgeting software available, you should be able to check and verify the balances fast. Always do your bills together while tracking all miscellaneous spending. With time, the scheduled meetings will help you put your finances in order. At the same time, having an allowance for every couple helps each one to spend some funds without thinking you are overrunning the household budget or you are unfair to the other spouse.
In houses where finances are merged, there are areas of disagreements that crop up:
One partner might be spending impulsively less on expensive items while the other might be spending frequently on less expensive items. At the end, each of the spouses will think the other is overspending.
It is common to find diverse taste preferences in a home where one of the spouses might have a hobby the other either does not participate in or value, such as expensive latte, private club engagements, expensive cuisines, cars or electronics. In turn, the family could look at it as expenditure only loved and enjoyed by one spouse, meaning the household is collectively paying for the needs of one person.
Another common area of disagreement is when the couple has not clearly and comprehensively thought through a budget to curtail overspending. This is especially so if the couple has discrete or obvious spending needs. Underestimating all the other minor things needed in the households could overrun the budget.
From a debt standpoint, you need to know what you are getting into in a marriage. One spouse could have a student loan, commercial loan or credit card debt that could have lots of implications in the household's credit, saving capabilities and budget.
It is not easy for a new couple to have all finances merged once they have married. Nonetheless, establishing a joint checking account is important. Such an account helps you see beyond and to plan for certain expenses such as utilities, child care, cars and houses, among others. The couple has no chance but to ensure the joint account and monthly budget are well outlined.
Sharing the responsibilities of contributing to the joint account could also differ from one partner to the other. The couple has to figure out what works for them and what doesn't. With different income levels, money in a joint account ensures both couples have to discuss finances without hiding secrets from one another. This helps avoid tension in the marriage.
As couples contribute at first to a joint account, one of them might get injured or lose a job. Joint contribution to a joint checking account will then be difficult. One couple can take responsibility of the entire account but it will be really hard to do the same and deal with an emergency. During hard economic times, the most affected are young couples since most of them have no plans in place in case one loses a job or for other issues, such as health. To deal with an emergency, the joint account can be parted by having an emergency account or a percentage of the joint finances in a checking recognized as the emergency fund.
Things related to finances changed by a marriage
After marriage, a lot of things will definitely change. Of all things you will do, ensure you have not forgotten the following:
Change the beneficiaries on insurance policies and retirement accounts in case you would like your spouse to be the one to inherit your items in case of anything.
Since you will be filing for tax returns together, some changes must be done to each of the couple's payroll withholding.
Estate planning papers and other documents should be updated after a marriage.
If there is a plan to have your name changed, it is important to ensure this is done on basically all the documents, bank accounts and even investment accounts.
Blend Your Lifestyles
It is very important for lifestyles to be merged, just like finances, immediately after marriage. Those couples whose income is not uniform might face a case where one of the couples want to have something expensive, for instance a vacation or luxury meal, but the other partner might not be able to afford it. Socializing expenses can be cut back to ensure the hobby of the other individual has been supported. Planning together is very important to ensure the couple are not living under different lifestyles and ways of life in the same house. It could lead to serious problems.
When a Spouse has Refused to Blend the Finances
Sometimes the spouse might decide he or she does not want to combine funds. Whether this is the case or not, the most important thing is to ensure a household budget has been set to cover shared costs. At the same time, know why the other partner is uneasy with merging finances while working to have the issue addressed.
Merging Finances Saves a Marriage
Always have at the back of your mind that a disagreement of a monetary nature usually leads to a strained marriage and could deteriorate to a divorce. By taking time to discuss your finances openly and how you would like to deal with them after marriage, blow-ups occasioned by money later in marriage would be avoided. Blending finances is not an easy decision or one to ignore or take lightly; talking to the other spouse is important to have a plan that can keep your marriage intact while handling your finances.
In case your earlier attempts to merge finances led to heated arguments in the past, an important consideration could be speaking with a marriage counselor with a good reputation and get things sorted out. Finances should be something that brings you together, a source of stability and joy while reinforcing your marriage.