Yes, we know talking about money isn’t as exciting as practicing what you did on your honeymoon -- but it’s just as essential if you want to keep the spark alive. You probably already had some kind of discussion about finances before you walked down the aisle. If not, now’s the time to determine the best way to merge your money.
Honesty is the best policy. Start by disclosing everything. Sit down and gain a thorough understanding about your partner’s spending habits, how much debt each of you is carrying, and what your credit scores are.
Take charge. Be sure to designate someone as the main cash (and credit) coordinator, who will be in charge of paying the bills and keeping track of the budget. You can alternate, but always have an organized record-keeping system that you both understand.
Plan for your future. What are your financial goals? A down payment on a house? A comfortable retirement? College funds for future children? If you don’t know the answers to these questions, you and your mate need to figure it out now.
Now that the preliminaries are out of the way, you can decide what method you will use to merge your money.
1. His and Hers. You each keep what you earn and pay for what you spend. Shared household expenses are variable and together you can decide how to fairly split them. You keep your credit cards in your own names, as well as any investment portfolios. Consider this option if you value your spending autonomy, don’t agree with your partner’s spending habits, or want the security of separate accounts.
2. Ours. Marriage symbolizes your unity and you may decide to demonstrate this by putting all of your earnings into a joint account and opening up a joint credit card. Everything that was yours is now his and vice versa. This is a true test of cooperation because you must be in constant communication about how you’re spending your money and what your future financial goals are. Although it can take some time to get used to, facing this challenge can bring you closer and further solidify your relationship.
3. His, Hers, and Ours. Many couples use this option because it incorporates the best of both worlds. You each maintain the accounts you had pre-marriage, while also opening a joint checking and/or savings account. A portion of your paycheck goes into your personal account, as spending money for your own expenses and indulgences. The remainder gets deposited into your joint accounts, to be used for household expenses and larger investments, such as a mortgage, car loan, or emergency fund. Using this method allows you and your honey to maintain some financial independence while learning the ropes of combined finances. It’s also a good way to test the waters if you’re thinking about plunging into a completely joint arrangement.
Finding the right rhythm is no easy task, but with flexibility, honesty, and communication, you’ll soon find a system that works for you.