Marriage and Money - The Considerations of Financial Combination

Getting married or engaged is an exciting milestone in life, but it also brings the important task of blending two financial worlds into one. While the emotional and relational aspects of marriage are often the focus, combining finances is equally essential to building a secure future together. Whether you’re setting up joint accounts, creating new budgets together, or discussing long-term financial goals, understanding how to manage your shared finances is essential for a successful partnership. In this article, we’ll explore why combining finances makes sense and offer practical tips to help you and your partner navigate this new chapter both financially and relationally.

First let’s look at why marriage makes sense financially. While not everyone’s financial situation is the same, very often marriage offers significant financial benefits. For example, the potential for higher Social Security benefits. If a spouse’s own benefit is less than 50% of the other spouse’s, they may be able to receive up to half of their partner’s benefit in retirement. Additionally, when you’re filing taxes jointly as a married couple, the income limits for IRA contributions are based on joint income, meaning couples can often save more than they would individually. Also, even if one spouse doesn’t have earned income, they can still contribute to an IRA based on their partner’s earnings. Marriage can also make a significant difference when it comes to securing loans. A combined household income usually increases a couple's ability to qualify for larger loans with better terms (both spouses’ credit scores are considered as well). Lastly, when it comes to healthcare, couples who work for different employers can have the option of choosing the best health insurance plan from either job, potentially saving on premiums and improving coverage (Ceizyk).

While it’s true there are some financial advantages of being married, understanding how to begin joining two individual financial lives and temperaments can be a daunting task. We’ll explore two important considerations that are essential to combining and managing finances in a marriage. The first is whether or not to have a joint bank account.

Married couples can choose between separate or joint accounts. Each one has its own advantages and challenges. Separate accounts allow both spouses to keep a sense of financial independence because each partner is responsible for their own spending and debts brought into the marriage. Having separate accounts usually feels fair since each person has some responsibility to manage the family’s finances. However, having separate accounts requires more communication about who pays for what. Tracking what each partner owes each month can become a burden.

On the other hand, joint accounts can simplify financial management by consolidating family expenses into one account. With all family costs being paid from one source, it becomes easier to track spending. This tends to eliminate the need for dividing resources monthly. Whether you’re saving for a home, a child’s education, or retirement, a joint account allows both partners to contribute to shared goals. However, this method also has its challenges. Couples with different spending habits may face resentment if one partner feels the other is overspending, especially if there’s a significant income gap. Additionally, keeping surprise gifts a secret or maintaining financial independence can be difficult. Still for many couples, the simplicity and clarity of managing finances through a joint account can ultimately strengthen their financial partnership(How to manage money).

The second consideration is the importance of open communication, which is essential to avoid misunderstandings and conflicts. Transparency about each person’s financial situation, spending habits, and goals is essential because some may be more cautious, while others might be more spontaneous or willing to take risks. Without transparent discussions, these differences can lead to resentment or stress, especially when unexpected financial decisions arise. According to a survey by SunTrust, 35% of couples reported that money is a significant source of tension in their relationships (Holland). To avoid this, couples should regularly check in on their finances to help ensure that both partners are on the same page. It’s also important to talk about long-term goals like saving for retirement, buying a home, or other major financial milestones. Discussing these goals together strengthens shared responsibility and helps ensure that both partners are working toward the same future. This ongoing communication can prevent one partner from feeling like they are carrying a disproportionate amount of burden and can make the journey toward financial security and stability a collaborative effort.

Knowing all of this, I offer these three practices for you to consider:

Try a hybrid method: consider opening one joint account for shared or family expenses, such as housing, utilities, and groceries, while maintaining individual accounts for personal spending. This allows both partners to have control over their personal finances while still contributing to the household in a clear and organized way.

Create an estate plan: having a will, durable powers of attorney, trusts, and a health care proxy in place will help ensure that any assets not owned jointly or that don't have named beneficiaries are passed according to your wishes in the event one spouse passes away. This is a vital part of securing both partners' futures and ensuring that assets are managed and distributed in a way that reflects your goals.

Have regular financial meetings with your partner: discuss your shared goals, track progress, and check in on your finances. Viewing these discussions as an opportunity to work together rather than a stressful task will create a positive financial dynamic. When you’re both engaged in the process, it strengthens the partnership and helps ensure that you are both actively working toward your financial future as a team. With open communication, thoughtful planning, and mutual support, you’ll be able to navigate the complexities of merging your finances and building a secure, shared future.

Ceizyk, D. (2024, December 17). Money and marriage: What to consider before tying the knot. Bankrate. https://www.bankrate.com/loans/personal-loans/creating-a-financial-plan-before-marriage/#plan

Holland, K. (2015, February 4). Fighting with your spouse? it’s probably about this. CNBC. https://www.cnbc.com/2015/02/04/money-is-the-leading-cause-of-stress-in-relationships.html#:~:text=Finances%20are%20the%20leading%20cause,the%20primary%20cause%20of%20friction.

How to manage money in Marriage. Barclaycard. (n.d.). https://www.barclaycard.co.uk/personal/money-matters/family-finances/how-to-manage-money-as-a-married-couple