Molly’s Money: How To Combine Finances After Marriage
I am so excited to be bringing back Molly’s Money! I’ve been wanting to bring this series back for a while, but honestly, I just needed some inspiration. I put the question out there on Twitter and Facebook and got some GREAT questions from a lot of you!
Needless to say, I have a lot of material for a while. BUT, if you have a personal finance / debt / money question, please please please post it in the comments below or you can e-mail me! I’d LOVE to try and answer it for you!
So, this week’s topic seemed like a very popular one as I got A LOT of questions about this one: How do you combine your finances after you get married?
Now, this is a loaded question and I could probably write an entire series just on marriage and money, but I, along with the assistance of my better-half, am going to try to do the best I can to at least scratch the surface on the issue today.
So, without further adieu, let’s get to it:
MOLLY’S MONEY: “HOW TO COMBINE FINANCES AFTER MARRIAGE”
I am going to put this out there right away: It should be noted that I am NOT an expert and there are A LOT of different ways that couples combine finances after they’re married. This just happens to be how my husband and I chose to combine OUR finances and it has worked very well for us. We are 100% on the same page with everything regarding our money and it’s a really important part of our marriage. You may do things differently and that’s okay, this has just worked for us, so keep that in mind. I’m also talking personal finances here and not business finances or anything like that.
Okay.
1. Once you say “I do,” it’s no longer my money and his money. It’s no longer my debt or his debt. It’s OUR (collective) MONEY. Or it’s OUR (collective) DEBT. It’s no longer mine or his, it’s OURS.
I’d say this is the most important thing to get out there right away and it should definitely be discussed before you say “I Do.” This is often the toughest step to swallow at first, but is honestly KEY to having a successful, open, and honest marriage.
Money is one of the TOP reasons that couples get divorced these days and the earlier you get started on being fully open and fully trusted with your finances, the better off you’ll be.
This was also one of the reasons I really wanted to get out of debt before we got married. My debt was my issue and my mistake and I didn’t want my husband having to deal with it. Luckily, we were married less than a month when we sent in that last check to NovaDebt. And yes, I say we because at that time, that last little bit of debt, even though it was mine to begin with, was then ours. And I hated that and I wanted it gone. And so together, we became debt free.
But seriously. I can’t emphasize how important this is. When you become husband and wife, you’re committing to ALL of that person. Every. Last. Bit. And that includes the money that comes in and the money that goes out. It’s OURS. When you get a raise, you both get a raise. When he loses his job, you both lost a job. You win, lose, and draw TOGETHER. Every. Last. Penny.
In my opinion (and I truly believe in my heart of hearts that my opinion is right), you both have to come to agreement on this and get this one right before you can go any further in your marriage.
2. When literally combining your finances, decide which bank account you want to go with. Together.
When John and I got married, he had way more invested, quite literally, in his bank. He had his mortgage, savings, credit cards, etc. all with one bank. With my bank I just had a checking and savings account. So, it was MUCH easier for me to close out my accounts and move over to his bank than it would have been for him to move to mine. So it was a no brainer for us.
Maybe the best option for you both is to BOTH close your accounts and start fresh by opening a joint bank account at a new bank. The answer to this question is really going to depend on your individual situation.
But you need to consider a few things before you make the ultimate decision:
- How much do you each have invested in your individual current accounts?
- How logistically easy / difficult will it be for one of you to close out your accounts and move them to another bank?
- Make sure to consider any bills or expenses that are automatically drafted…
- IMPORTANT: See #3 below
3. Don’t fall into the trap of “Well, we’ll open a joint bank account, but we’ll each keep our own separate bank accounts too on the side.”
Now, this may be a hot button issue for some of you as I know a lot of couples who have gone this route. Or maybe they didn’t even open a joint account at all, they just decided to keep their accounts separate. But let me warn you, if you decide to go this route, you’re opening yourselves up to potentially serious conflict down the road.
The justification for some people is, “Well, I may want to buy something that my significant other doesn’t want to spend money on, so I want to have my own stash of cash for those situations.” But, I’m sorry to say, that ain’t how marriage works.
The MINUTE that you introduce any kind of secrecy in your marriage, the quicker you’re setting yourself up for trouble. And in addition to that, when you’re, quite literally, FORCED to make financial decisions together, inevitably the closer you’ll become. For the most part, EVERY SINGLE DOLLAR that leaves our account is agreed upon by both my husband and me.
Now, there could potentially be one exception to this point: “My spouse has had debt collection issues in the past and so we don’t want to tie our accounts together for fear of both of our assets now being available to creditors.” This is obviously a sticky and complicated scenario, but it does happen. My suggestion would be to still open an account that you TREAT as a joint account, but is really in the name of the non-vulnerable spouse. THEN you can have the vulnerable spouse be an authorized user on the account. That way, same rules apply, but you’re not risking that account being open to creditors. Check with your bank to be sure that it’s not technically a joint account and that this is the best option for you both.
4. Do A Monthly Budget. Together.
Now, I will say that in our marriage, John is the primary decision maker and “keeper of the finances.” He pays our bills and does all of that crap that makes my head hurt. I am in the know on everything, whether I understand it or not. I am not the one gifted with numbers, my husband is, so I gladly let him take care of our money management. But, we still sit down together, every month, and we look at our budget and see what needs to be adjusted, what expenses we need to prepare for that month, etc.
We agree, together, what the rules are going to be at the beginning of the month, and then we hold each other accountable in following the rules throughout the month. Obviously being disciplined and sticking to the rules is tough for some people, but the accountability of working together can be helpful.
By doing this together at the beginning of the month, you can get the frustrations, discussions, and the debates out of the way. Then, come to an agreement, come up with any compromise that may be required, and then, for the rest of the month, you don’t have to deal with ongoing strife.
And remember: “Children do what feels good, adults devise a plan and stick to it.” -Dave Ramsey.
Want to see how we do our budget? You can see EXACTLY how we set our budget AND get a sample spreadsheet here.
5. Personal Spending Money in Marriage
So you want that individual bank account so you can buy what you want. I get it. In general, as a couple, want to talk about any MAJOR purchase decisions together. The way that you personally define “major” will depend on your income, but it should be something you agree on. Now, if I want to run to the store and get a cookie dough twister for myself, I’m gonna do that and it’s probably okay if I don’t ask John ahead of time. BUT, if I want to buy that $150 Kate Spade clutch I’ve had my eye on for months, I AM going to talk to him about it before I make that purchase.
Now, John and I both have built into our joint budget two line items called “JOHN CASH” and “MOLLY CASH.” Each month, depending on our other budget restrictions, bills, expenses etc. we budget in CASH money for ourselves. It can range anywhere from $50 to sometimes even $200 each depending. THIS is the category where we can spend our money how we want. If John wants to go to Home Depot and buy a tool or supplies for a project, he can do that with this money. If I want to go shopping and get myself some new shoes, I can do that with this money.
This is also the category in which we buy presents for each other at Christmas or other holidays so we don’t ruin the surprise.
We both believe it’s REALLY important to have these line items built into your joint budget because it does still allow you some wiggle room, financial freedom, and the ability to make minor purchases without a “budget committee meeting.”
Now, it may be tempting if one spouse makes a lot more, then they may think that they should get more spending money. WRONG. WRONG-O. NOPE. NAH. NO. If you’re confused about this, refer back to point number ONE. My income + my spouse’s income = OUR income.
Also, if there is a larger purchase that you REALLY REALLY want, but you just can’t seem to agree on it, this is the category and the opportunity where you can save up each month to eventually buy it on your own.
6. Mortgage, Utilities, and Other Bills
When we got married, I moved into the home John already owned and the mortgage was in his name. There was really no option or even reason at the time to “add me” to the mortgage. Obviously we pay the mortgage together, but the actual house is in John’s name only.
However, this past November we decided to refinance. When we went to go through to steps, we realized we had two options: 1) to keep the loan and mortgage in John’s name only or 2) refinance together and have it be in both our names.
We opted for option ONE because although my credit score is not terrible anymore, my credit score is still low enough that it would have hurt us more than my income helped us. So, the rate to refinance was better if we just kept it in John’s name. So, that’s what we did. Now, I still had to sign and initial like 20,192,129 pieces of paper because of NC state law. But, in the end, it’s all in John’s name. The paperwork just says I’m married to him.
With utilities, those are all still in John’s name as well, again, because it’s just easier that way and not necessary to add me or change them. But, we both pay them.
The only thing we did combine was our cell phones which we went on a family plan because it was cheaper and in that case, John actually came onto my plan. This made sense for us at the time.
This is all the more boring, nitty gritty stuff, but it’s important to at least address and get out there. A lot of these things are really going to be up to you as a couple.
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Okay, that’s all the points I have for today. And I know that this is not EVERY point that needs to be hit. I also know that, for a lot of people these points could potentially raise more questions than I answered, and that is not only okay, but also GREAT.
Please, ask your questions! Again, leave them in the comments or you can e-mail them. I will do the best that I can to answer them each in a future post (keeping you totally anonymous).
Thanks for reading!
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https://goo.gl/PuwA0pThank you so much for this post! I’m getting married in a couple months and my fiance and I are getting ready to discuss our finances. This is especially helpful because our living situation is just like yours was, and I’ve been wondering what to do. Your advice is wonderful! Thank you!
you’re so welcome!
I recent got married and my husband and I planned on doing separate accounts due to trying to avoid fights. Well as you stated, this is not the best idea and we are trying to figure out a way to meet an agreement. I recently go offered a job and will be making more than he is. We both have credit card debit and student loans. How do you determine which credit card to pay off first? This is going to be a BIG adjustment for us, I like to spend and he does not. I want to ease into this in the most successful way possible. Any advice would be great.
Hey Tiffany! GREAT question. And there’s really a lot to it – but it really all depends on what KIND of debt that you have. For credit card debt, I would tackle the one with the highest interest first, in my opinion. This would be a great post for you to read: I hope this helps!! http://www.stillbeingmolly.com/2012/08/09/mollys-money-series-dealing-debt/
Question: How do you handle your business account(s)? My husband and I have a joint bank account which the majority of money goes in to, but we also have “individual” accounts that we use for our side businesses (I have done Thirty-One and such over the years). This just made it easier to see what income I was generating and what was going out without accidently dipping into our joint bank account. Just curious to know your opinion! I love your $$$ posts! We did Dave Ramsey’s Financial Peace a few years ago and have been working on our debt snowball. We are almost done and I can’t wait to make that final payment! It’s going to be soo freeing!
Hey Sophi! GREAT question! My husband and I both have side businesses too (he has a small side business and I have a “business” in this blog). We do have separate bank accounts for our side businesses. However, a couple things about that – 1. we both have access to the business accounts if we NEEDED to (and to hold each other accountable). 2. if we take an INCOME from those accounts, that income is OURS. For example, I hardly HARDLY ever take an income from my blog account because pretty much 90% of the money I make on this blog is invested right back into it for hosting fees, domain fees, paying my developer, designer, buying / upgrading / taking care of equipment, etc. But, any major purchase I make with my business account money, I always ask my husband first. Does that help and make sense?
Yes it does! Thank you so much!!!
my wife owns a house and rents it, it is worth a lot and brings in a few hundred a month rent income. I have a separate stock trading account that has is much smaller and doesn’t really bring in anything. However I am the breadwinner and bring in a low 6 figure income from my day job. She does not work. She uses some of the rent income to pay tuition for our son. So she wants me to spend more of my stock money on the family, but I don’t want to touch it because that would diminish its return power. So the problem is she wants me to make sacrifices from my stocks, but I dont want to touch them, and I already feel like I contribute a lot from my paycheck. It’s very touchy.
Just found your blog. Great post and one every new couple should read and adopt. When I was married it was better for our relationship to have separate accounts. Not all couples can handle this arrangement and the your/mine/our scenario is too much for some men to handle, especially if the woman earns more.
Molly, I had this post saved in my reader to “get back to” for a few days, and I am so glad that I took the time to read it thoroughly beginning to end. I really like your advice – straightforward, with no wiggle room. My bf and I have been dating for 3 years and just moved in together this summer. It isn’t how I saw my love story going – I thought we would be married before we moved in together – but this is the way that it is going, and I am learning to accept it. We are also learning to share money and make responsible budgetary decisions AS A COUPLE… and let me just tell you that it is hard, but having a equal footing in the money pot is GOOD for our relationship, and I am glad that we are getting this practice before tying the knot and having major purchases to plan for. So what I really mean my this novel of a comment is that I Love this series lady!
xx
Here&Now
ah jessica thank you SO much for your honesty and your comment. that’s SO great you guys are on the same page and i’m so glad you’re finding this series helpful!
I completely agree with all of your points!!! We manage money in a very similar way. Honestly, I feel so lucky that this is one area of our lives where we almost never argue. We know where we stand all the time!
That’s awesome, Jamie! It really is so important.
I whole-heartedly agree with all the points in the post!! We have done almost everything the same way to a tee, and it has been so good for our marriage. It’s hard sometimes not to want to buy something without telling him, but I know it’s good for us in the long run to do everything together. Great post, Molly!!
absolutely, laura! it’s so important!
Hubs and I both entered our marriage debt free with the exception of good debt. We combined our finances quickly, mostly because I moved half way across the country to marry him. My bank didn’t even exist here. I knew the hubs would be sensitive to spending (and I’m cheap!), so I can remember calling or texting him, just to let him know I was going to buy a coffee or whatever. I wanted to move slowly with it and be sensitive to his needs. Now, it’s a no brainer. And I can even buy coffee without his knowledge. ha!
Honestly, I think the keys are communication and respect.
– Heather
amen to that, heather!! it’s So important.
Hi Molly! I love your blog. I’m a single gal, so I know that I’m definitely not an expert in the matter of combining finances, but I’d love to hear more about why you think it’s important to combine everything, including debt? I currently have about $85,000 in student loan debt, and if I’m still working on paying that off once I’m married, I don’t want to pass that on to my husband, since it was my fault for getting into such massive debt in the first place!
thank you SO much, monique! in my opinion, when you’re married, you marry all of that person, debt included. and so you become a TEAM. and as a team, you work together to pay off the debt. it’s tough, which is why you have to get it out there in the beginning, but i believe it is SO important to be victorious and debt free as a team and also go down as a team. it was tough for me to swallow at first too, but if you communicate to your future husband to be supportive, he’ll be there every step of the way!
I’m a new follower. What a great post! Very important stuff. My husband and I have been listening to Dave Ramsey for the last couple of years and I should wish our parents would have fought us these things growing up. : )
http://www.walkinginmemphisinhighheels.com
thank you so much, laura!! Dave is AWESOME! I know, I wish I’d known A LOT of this earlier in life.
You have a lot of important insight into this hot topic! It’s definitely an important discussion to have with your partner. No matter what you decide on in your relationship, it’s important to both be on the same page above all else. Money WILL be a conflict if you don’t agree beforehand. And that will kill any relationship…married or not.
xo,
nancy
SO true, nancy!! communication is key.
I’m so glad DJ and I are on the same page. We’re moving to his hometown in Mississippi sometime this year or next and he wants us to treat our financial situation the same way you guys did. It’s the way we both think it should be done. This was really helpful. And well written! 🙂
amen to that! so glad you guys are on the same page, too, sarah!! it’s Such a great feeling!
Great post! Me and hubby aren’t combining our finances since we both have full time jobs. But we do have a joint account for rent and stuff like that 🙂
thanks, clare!! yeah we both have full-time jobs too, but we decided the fully-joint route was best for us 🙂
I think it’s even more important to combine finances when you both have full-time jobs! There’s more available income, thus more income to share as one unit. 🙂
This post was RIGHT ON THE MONEY (c wut i did thar), Molly… and interestingly enough, was an object of contestation between Dustin and myself when we were first dating. His logic trumped mine…as it should have, because it was biblically-based logic. 😉
thank you so much, emily!!
Oh Molly, how do you know EXACTLY what I need to hear, when I need to hear it? So we’re in this weird limbo stage of engagement where we’re on the brink of deciding how to combine our finances and this was a perfect read! I’m curious, did you combine finances prior to your wedding? Also, how in the world did you pay for a wedding?! Haha we’re budgeting for the wedding now (we’re funding it all on our own) and there’s a high chance all of our savings for the next year will be used on the wedding. Being the money savvy diva you are, how crazy does that sound?
haha i must have blogger ESP. 🙂 it’s DEFINITELY a tough, limbo stage. here’s what we did, we opened a joint checking account BEFORE we got married, but it was our wedding account. all the expenses for the wedding went in and out of that account – and it was ONLY wedding expenses, nothing else. we closed that account after the wedding.
we waited until about a WEEK after we got married to do the actual switch (once we got back from the honeymoon) and it was after i legally changed my name. so we got back from the honeymoon on Saturday, I went to the social security office on Monday, got my name changed (and they give you a little sheet saying it’s changed) and then we went to the bank that following Saturday to do the official switch. That way it was a whole lot easier logistically to do everything with my name already changed so i wouldn’t have to go back and do it later.
also, yes, we paid for our wedding. we took a LITTLE bit out of savings, but we basically pulled on the financial reigns and saved a lot every month toward the wedding. my in-laws helped a little, but we paid for the majority of it on our own. we figured out how much we could afford to save each month and then calculated our wedding budget from there and stuck to it. it was hard, but we did it! i’ll probably write on this soon, too! 🙂
thank you so much, evani!
We paid for our wedding ourselves too (with a little help from parents) and let me tell you – the budget was our saving grace! Figure out what you can reasonably afford and stick to it. Pretty much every decision that had to be made – we just asked the question: does this fit into our budget? Even though my husband thought calligraphy was an unreasonable expense, it fit into the budget so we didn’t have to argue about it. I would totally recommend laying everything out there in the beginning, it will make planning that much less stressful! And you won’t start out your new married life in debt 🙂
that’s awesome, amanda! such great advice.
We’ve been married for a year and a half and we’re still trying to get into a financial plan that works . We have very different spending habits so it’s been a process trying to find a balance. Down the road we may get a joint account, but for now we have two separate accounts.
-Sharon
The Tiny Heart
JCrew Giveaway!
oh yeah it’s DEFINITELY a process for some couples – heck, every couple. it’s definitely not easy. but that’s why it’s good to at least have the discussions! you’re definitely on the right track!! 🙂
I love your Molly’s Money posts! I’m going to share this with the Hubby!
thank you so much, niki!! i’m so glad you find them helpful!
I love this post, I’ve felt really out of control lately with my finances and it leads to unnecessary stress. We put everything we buy on credit cards and pay it all off at the end of the month (been married 2 years and never have missed paying it all off). So that’s not an issue, and we also get points for using the card. We’ve received hefty gas gift cards, etc. But on the negative side, I feel like I can just swipe like a maniac without having a clue how much we’ve charged that month. The buyer’s remorse sets in when I get the credit card bill. Would you suggest nixing the cards with the bonus points or maybe sticking to a tighter budget. It seems like a self control issue, but its so hard to keep up with what you’ve charged.
You’re awesome, you’re diligence and hard work to pay off your debt inspires me. My student loans drive me crazy, but we are over doubling our payment so we will have them paid off 18 years sooner!
Hey Rebecca, thank you SO much for your comment and your openness!! It’s hard because it’s different for every couple. We use our credit cards EXACTLY LIKE a debit card – so when we get paid throughout the month it all goes in our checking and then at the end of the month, we pay the credit card off in full. Now, we stick to a LINE ITEM budget and we literally track and record EVERY receipt. I even record my receipts for $0.85 at the gas station when I buy a pack of gum. So, we know exactly how much we bring in and EXACTLY how much we spend – down to the last penny. And so there are no surprises at the end of the month. Now, for some people, cutting the cards is the best option and just going to STRICT cash. That might be the best for you, but maybe try a line item, track every expense, budget one month and see how that works. Let me know what you think!!
I love this – it’s definitely hard when you first get married to go from mine/yours to ours, but it makes your relationship that much stronger once you do! Sometimes you have to have difficult conversations, but that’s a part of being married!
amen, kim!! no one said marriage was easy – there are always going to be difficult parts, but that’s all a part of being married! 🙂
These are great tips!!!! THANK YOU!!! I have been waiting and praying for this post and it could not have come at a better time. You’re amazing <3!
yay! i’m SO glad you found it helpful, liz! let me know if you have any other questions!!
Great tips – I’m always interested in seeing how other people coordinate their finances. BF and I have discussed this in the past and I think we’re going the joint account/separate accounts route when we get hitched. I know it’s not for everyone, but we have completely separate accounts now and I don’t feel like there’s any secrecy on who is spending what. We’ve got our separate expenditures and have separate incomes coming in plus we’re both saving for the future.
thanks for reading, girl and thank you for your comment! and i totally understand, but i would definitely at least advise that it be something you both discuss and consider. the joint / separate account route often has great intentions, but can introduce conflict down the road. you know you’re relationship best and you should always make the decision that’s best for you! 🙂
So glad you did this post! I am actually going to send it to my husband to read. Fabulous. I really like how you give yourself and your husband “me money” I think that’s a great idea and how no matter how much you make, it’s equal.
amen to that! i’m so glad you found this helpful, lins!!
My boyfriend and I have already talked about this when we move in together. It’s so crazy to think that there will come a time when you combine your money! I will keep these tips in mind!
absolutely! it’s definitely a crazy and often stressful time, but not all change is easy, but often it’s always for the better!
great tips, Molly! I agree setting a budget together is so important.
amen to that! thanks, beth!
I’m going to admit something’s to you. First, I love you. I love this post. I love your blog. Second, I don’t know why I don’t read it anymore or any other blogs that I really like and find useful/inspiring/beneficial, etc. I’m truly sorry about that. I’m making it a goal right now to read more of the blogs that fill my cup. Yours especially, is one of them. I love this topic. It’s such a hard one but so important too. And you helped me realize that what I’ve been fearing all along when it comes to money and relationships (particularly in my current, soon-to-be not so current relationship) was wrong. I was brought up seeing all the “couples” i.e. my parents, grandparents, other family member couples, friends’ parents have joint accounts, make decisions together, and so on. That’s how I thought it should be. I learned just a few months ago that that’s not how everybody thinks. And that’s ok. But it doesn’t mean that I’m going to change the way I think. Might be a bit too personal, ha! I’m really into this whole bearing my heart and soul thing lately. But thank you for writing this. I feel like it was something I needed to read to affirm what I already knew. I promise to read your blog more and comment from here on out. xoxoxo
aw thank you SO much for your heart felt comment and for sharing your heart. this is DEFINITELY an issue that can often be difficult for people to swallow, but it’s SO important. and good for you for not changing the way you think. that’s ONLY going to help you down the road!
Yes, Dave Ramsey! I value his advice so much! Thanks for the much-needed tips. Happy Thursday!
me too! i love dave! thank you so much, silver!
Molly this is so timely, so thank you! I was just talking to my boyfriend about having the talk about finances (we don’t know how much each other makes/spends) and both agreed it’s a good idea to have before the next step. Your tips were really good reminders of the whole “we” and “our” thing (yeah I think that’s called marriage)?? It’s tough after spending 32 years on my own and the though of sharing my money sorta kills me – but your tips on the big picture really helped 🙂
XO
Pearls & Paws
hey heather! thank you so much for your thoughtful comment. i’m glad you found this helpful! it’s definitely a change, but hey, that’s marriage, right? 🙂
This is some really great advice… Stepped on my toes a little in some areas but in a good way 🙂 Thanks!
thank you so much, ashley!! please don’t hesitate to ask any questions! I’m glad it got you thinking 🙂
Great post Molly!!
Thanks!
Theeliteebony.blogspot.com
thank YOU so much, jen!