Marital finances can often bring about many questions for couples, and it can also raise
concerns about the best approach to take in combining incomes. Should you keep your
finances separate? Should you consolidate everything into both names across all accounts? Or
should you have some accounts together and some apart? There is no one size fits all
approach, but I can steer you in the right direction depending on your and your spouse’s
approach to finances.


Setting up a financial plan can be overwhelming. Couples are not always sure what the right
option is, resulting in arguments and frustrations. After reading this, you’ll know the difference
between all approaches. Then, you will be able to make an informed decision depending on
your needs and preferences, knowing the benefits and risks of each option.


But first things first, in its most basic form, financial planning before marriage is all about
communication. As a matter of fact, everything is about communication. Get good at talking to
each other about everything, but especially about finances. Simple, regular conversations can
keep your goals aligned and help you avoid arguing over your spending habits or payment of
bills.


Before you say “I do”, it’s a good idea to get to know each other’s spending habits and approaches
to money. You should also talk about your financial situation, money habits, credit score, and
how you feel about debt. Are their opinions the same as yours? Are you the type to spend
money on quality or quantity? For example, would you rather buy high-quality pair of shoes that
will last you for years to come or spend less upfront and buy new shoes every other year?
Another scenario could be how we feel about credit card purchases. Does your partner prefer to
pay off the credit card balance after every purchase, or are they okay with accruing a
manageable balance and paying it at the end of the month?


These questions will help you understand the best approach for your marriage. When both
partners know what’s happening with the other, things work well. If not, it can be hard to keep
track of everything. Imagine if the offensive coordinator of the Denver Broncos doesn’t know
what the defensive coordinator is doing. The Broncos likely will end up losing that game. The
right-hand needs to talk to the left hand, and as you embark on your journey as a couple, you
are embarking on it as a team. Work together to figure out the best approach for you.
Now, let us break down your options, along with the pros and cons of each.

Separate Finances

The decision to start a marriage by keeping separate bank accounts and bills can be a
a convenient option for many newlyweds, especially as it allows them to focus on their finances and not worry about the other person’s. When it comes to keeping separate bank accounts, you need to be as transparent as possible. Just because you have separate accounts doesn’t mean your balances should be a secret. This will help you maintain a healthy relationship with your spouse, and it can also make a big difference in how you perceive your finances as a team. Each partner has control over their budget and spends money as they see fit on things they want and need.


Pros: It is simple to manage since both parties control their spending habits and can be
effective for couples with similar incomes. This can help avoid arguments about money.
Separate finances promote the independence and autonomy of both spouses. Hence, you can
make your own decisions without interference from the other person. No one enters a marriage
with the end in mind, but in the case that you and your partner begin exploring a divorce, it will
likely make it a much more seamless process in dividing assets.


Cons: One drawback to this approach is that it does not allow you to build equity or retirement
savings as effectively. You will naturally accrue smaller gains in your investments because you
don’t put your money together in one account. It also can become more of a challenge in
managing shared bills and expenses like payment of rent or mortgage payments. Also, your
spouse may ask you for money if the going gets tough, and that’s can always open up a new
can of worms.


When considering this, my advice would be to make sure that you and your partner have crystal
clear communication from day one to make this work. Couples who choose to keep their
finances separate should agree on how to handle bills and purchases that affect both of them,
like a new couch or flat-screen TV.

Hybrid Finances


After marriage, it becomes natural for your financial habits to change. You may have new auto
insurance or homeowners insurance needs. One thing you might want to consider is a hybrid
approach to make sure each spouse contributes to these new demands. With that said, many couples benefit from opening independent checking accounts and one core checking account that you both contribute to each month. You may consider contributing a percentage of your income or even a set amount each month. You can have access to the shared account with limited options that serve the family, but your personal accounts with full
independence.

Pros: A hybrid approach is a sensible way to maintain autonomy while also playing a shared
role in your household’s financial management. Using this approach, you will be able to make
decisions following your personal goals and objectives while still maintaining shared
responsibility for the budget, as well as any other financial obligations that you have. It will help
minimize the risk of conflict or tension in the household, which is a significant goal for anyone
looking to avoid stress and arguments over the kitchen table. There is also less friction when
making big purchases.

Cons: You need to be consistent and find equitable solutions. If one makes $100,000 a year,
and the other makes $75,000 a year, what should contributions look like?
Another hybrid scenario could be solely maintaining separate credit cards, and combining all
other income into joint checking and savings accounts. I have seen many people go this route,
and it actually is one that I would recommend out of all options, assuming you don’t have a
credit card abuser in the relationship.


Pros: This approach promotes unity and partnership while still maintaining flexibility on an
individual level. It becomes easier to gauge your financial health as a couple. This is also a
great option if you both have different views on debt.


Cons: The only element to keep in mind is each of your abilities to manage debt and spending.
The last thing you want is to have one of you accrue tons of credit card debt without the other
knowing it.

Joint Finances


This approach is a great way for couples to budget together, invest their funds together, and
increase the size of their savings over time. Newlyweds with a high level of trust who share
similar spending and saving habits are more likely to want a joint account than spouses who
have different spending styles. If you decide on combining finances, it will be much easier for
both of you to track your spending habits and save money for future needs. You have to
maintain an accurate account of all joint income and expenses to know where you stand
financially. In addition to that, it is essential to have a joint plan in place and keep each other
accountable for adhering to the agreed financial goals.


Pros: It is most beneficial for creating a joint approach to financial management, which can be a
good way of working together. You share the same goals and objectives as a couple when you
consolidate everything into both names. Secondly, there is the tax perspective. Filing taxes as a
married couple has its benefits – there are certain deductions and credits available for you.


Cons: The downside to this approach is that it only works if you have a shared view of
spending. It may be difficult for couples who have different spending habits or if one partner has
a higher income than the other. This could lead to arguments about how much they should
spend or save. Finally, one can say there is a total lack of independence. Every move of the
other person is going to be noticed and could become a topic of discussion.

There is no right or wrong way to go about finances after marriage, but our recommended
approach is to go hybrid. Again, it all depends on your relationship dynamics and your spending
habits. If you’re getting married soon, or even if you are an old pro couple that is reassessing your financial plan, email me directly. I’m happy to be an informal sounding board as you continue to build a strong financial future.