Guide to Combining Finances After Marriage

Marriage finances can either be a source of unity between a couple or cause discord. It all depends on how they are handled. Financial differences are the No 1 stress factor in marriages leading to divorce. Credit problems can even lead to divorce! Read out this complete guide to combining finances after marriage.

The good news is that you can salvage everything by tweaking your approach to marital finances with honest communication and mutual planning. If you’re looking for how to combine finances after marriage, there is no one-size-fits-all.

3 Essentials for Combining Finances After Marriage

  • Shared Priorities

    The key questions to ask each other are:

    • What do we mutually value?
    • What are our shared financial objectives?

    These joint priorities are borne from the intersection of your individual values and goals. Discuss what an ideal financial situation looks like to each partner as well as each one’s idea of financial freedom.

    The financial end both of you are seeking, determines the means.

  • A New Combined Budget

    You can’t plan your financial future without a clear picture of how much money is coming in for both of you and where it’s going.

    Some couples choose to pool finances in one joint account and pay out the expenses, savings, investments, and personal allowances from that single pot.

    This approach doesn’t work for everyone. Others prefer to divvy up responsibilities and pay individually.

    Whichever approach you take, you need a clear outline of income and expenses. Here’s an example budget to get rid of debt.

  • A Family Spending Plan

    While a budget sets out the current state and use of finances, a spending plan is a blueprint of where you want to go.

    This plan provides the details of how you will fill in any gaps in your budget. It set out how you will meet your expenses and how you will achieve the financial success you both want.

The Finances-Conversation Toolkit

The money conversation is difficult to have especially if you have different financial beliefs.

Think of the partner who wants to take calculated risks on the stock market versus the one who wants to put everything in a secure savings account.

So how do you break the ice and start that first money conversation?

  • Set a Dedicated Time

    Don’t ambush your partner with the big money talk as they’re rushing to work or when you are both tired from a full day.

    Agree on a suitable time for the chat together. This will also allow each of you to prepare anything they would like to bring up during the chat such as objectives and gripes.

  • Full Disclosure

    Research has shown that 30% of partners have secret savings.

    Brutal honesty is advisable when discussing finances. It’s a useful exercise to do a marital balance sheet. Though typically created during a divorce, a marital balance sheet can still be a very positive and useful tool if undertaken together.

    You will be answering these questions.

    • What are the assets and who do they belong to?
    • How much debt is there and who does it belong to?

    You should have a clear picture of what assets and debts are joint and individually acquired.

    During this honest conversation, address any surprises that might have popped up while doing the balance sheet. Was there a debt you did not expect? Is your spouse’s income lower or higher than you expected? What expectations did you each have?

    Make sure you check your credit score and have your spouse check theirs. This way you get full understanding of everyone’s credit situation.

  • Create a No-Judgement Zone

    If the revelations in the previous step are such that you can’t remain cordial, take a step back. Request time to process the information and set another date to revisit the financial conversation.

    Another solution to employ when the conversation heats up is to take turns speaking, 2 minutes each. Everyone gets a chance to be heard.

    The money talk is not an opportunity to verbally lash out at your partner about real or perceived failures, or about credit problems.

    Mutually create a space of no judgement which will foster more honesty.

  • Get On the Same Financial Wavelength

    Between the two of you, who is the spender, and who is the hoarder? Understanding how your partner’s financial outlook differs from yours will save you a world of recriminations.

    The goal of this step is to find a middle ground from which to navigate your financial future together.

    Figure out what a rich life or financial freedom looks like to each of you.

  • Create Systems

    To make your financial conversations fruitful you need to set SMART goals and create systems to implement them. Some systems you can create are:

    • Create money rules around spending and what amount requires a consultation before spending
    • Joint accounts for shared expenses
    • Money tracking and budgeting apps such as Mint by Intuit
  • Allocate Roles

    We all have different strengths, some are good at enforcing frugality while others are excellent at spotting investment opportunities.

    Having determined the needs and set the financial systems, you need to decide who does what.

    For instance, if you choose to split expenses, you can assign them pro-rata based on how much each spouse is earning.

    The thing to remember is that neither spouse should feel diminished. After all, money has a strong power component.

  • Financial decision checklist

    This set of questions can help make sure both of you feel seen and catered to in your financial plans.

    • Is it fair to both?
    • Do you both feel heard in the decision-making process?
    • Does it match your individual and joint values?
    • Does it support your mutual goals?
  • Make It a Regular Thing

    You can agree on a regular chat to discuss the health of the marriage finances. Whether it is monthly or quarterly, take the time to review how effective your budget is and how well you are sticking to the plans you made.

    Discuss potential investments. Keep in mind the foundations of this conversation which are honesty, respect, and no judgement.

Financial Considerations Before Marriage

The thrust of this article was how to untangle your marital finances once you have already tied the knot. That said, these are conversations you can have even before marriage. One useful premarital tool is the prenuptial agreement.

  • How Do Prenups Work?

    Popular literature and the media have convinced us that the main purpose of a prenup is to protect the wealthier partner in the event of a separation.

    A prenup lists the assets and debts each partner has and details the financial rights they will each have after the marriage.

    Prenups can also be useful for:

    • Protection from debt
    • Clarify financial rights in the marriage
    • Pass separate property to children from previous marriages

    Whether you and your partner start discussing finances before or after marriage, remember to foster the partnership aspect. Be honest and understanding. Create a plan that puts to good use your individual strengths for the achievement of mutual financial success.