Merging Finances After Getting Married

Conventional wisdom has held that money issues are the most common root cause of divorce. Whether that’s factually accurate, or just the prevailing public opinion, money problems are a huge stressor even for an individual, and that stress can become exacerbated when it involves two people in a relationship.

Merging finances after a couple gets married is often the first step in that couple’s financial lives together. Like many couples, my wife and I eased into that transition when we were dating by living together. While the choice to live together before we were married was in no way made with finances in mind, it did help start up that transition. While at that time we still had all of our own accounts, there were still a number of issues that we had to work out together.

When we became engaged, those issues became more pronounced. For some, the engagement period can be a pressure-cooker, and while ours wasn’t nearly as stressful as the experience is for some, it did teach us a lot about how to talk to each other about money and our personal financial management habits when it came time to pay for the wedding. And it was at this time that we set up our first joint account together, a checking account that we would each automatically deposit money into each month as a means of saving up for the heavily back-loaded wedding expenses.

After our wedding and honeymoon was over the real work began. In addition to merging our cell phone and insurance plans to save money, we had to come up with a comprehensive strategy for how we as a couple were going to manage our money from that point forward. Involved with that strategy development was an honest assessment of where we each stood financially as individuals, and how that affects the both of us as a couple. Some of those issues included:

• Debt – Outside of staggering student loan balances, the only debt either one of us had was a balance on a 0% interest credit card. While we could have let that debt sit there for a while, we both made it a priority to pay it off as soon as possible, which we were able to do shortly after the wedding (it wasn’t a very high balance). But the student loans were an issue of their own. Some experts recommend paying it off as soon as possible, while others suggest that due to the relatively low interest rates, just pay it off in installments and put that extra money to some other use. Either way, your views towards debt of all kinds needs to be discussed.

• Tax Strategy – This year will be the first that we’ll be able to file our taxes as a couple. But should our status be Married Filing Jointly or Married Filing Separately? That question is something we’ll have to evaluate as a couple pretty soon.

• Budgeting – No two people have the same budgeting strategy. And in many cases, those budgeting strategies (or lack thereof) can run in direct opposition to each other. Living together before we were married exposed each of us to each other’s budgeting strategy, but the issue becomes a bit more important when you’re actually married.

• Financial Expectations – What should be done with the extra money earned each month? What are the savings priorities of the family? These are also important questions to answer. For my wife and I, we’ve decided to use my salary to pay nearly every bill and then save her salary. In the year that we’ve been married, we’ve discussed buying a house, having children, taking vacations, etc… and it’s helped give us a clear vision for our savings.

• Financial Management Responsibilities – I enjoy managing our finances. I like researching companies for investing purposes, and I also enjoy playing around with Quicken and making those cool, colorful graphs. My wife, however, does not enjoy that at all. So while I readily accept that responsibility, we still have to work out a way for us to talk about our finances so that we’re on the same page.

Of course that’s just some of the issues that have to be taken into consideration. And it seems as if communication is the more important tool of all. The ability to effectively communication ideas and expectations can help alleviate stress down the road. For our married readers, what was the financial transition like for you?

Michael
Twitter: @michael_dink