Financial experts share the pros and cons of combining finances as newlyweds or long-term partners.
Marriage and finance experts alike urge couples to discuss money openly and honestly before tying the knot. Whether or not you decide to combine finances after getting married will depend on your specific situation, and there are pros and cons to both combining your finances as newlyweds or keeping separate accounts. But in short, these financial experts agree, there’s no one-size-fits-all solution. Here’s how to work through the best financial option for you two after making it official.
There’s No 'Right' Time to Combine Finances
These days, combining finances isn’t something that happens the day you get married. For couples who live together before marriage, deciding when to combine finances might happen organically or out of necessity. Lauren Anastasio, a certified financial planner with SoFi, says there’s no right or wrong time to consider opening a joint bank account or taking out a new credit card together. When you do it is up to you.
“Whether you decide to go all-in together with your finances the day you get engaged or years after saying ‘I do’ remember that there’s always some level of risk involved in giving someone else access to your wallet—though that doesn’t mean it’s not the right choice,” Anastasio says.
That means sharing your savings account with a spouse has the same pitfalls and advantages as doing so with your longtime significant other.
“Money always has the potential to be a hot-button issue, and whether you’re newly engaged or recently tied the knot, you’re in a period of your life when emotions are naturally running high,” Anastasio adds.
Communication Is Key
If you have cold feet when it comes to the money part, Anastasio suggests taking baby steps. The first of which is to have a candid conversation about your personal finances.
“We all know that when money is tight, it is one of the most common causes for divorce,” says Rod Griffin, director of public education at Experian. “You should go into the marriage, eyes wide open. If you do not share your financial circumstances with one another fully and openly, in my experience, that it will likely become a problem.”
Your best bet? Have a money talk and lay it all out on the table—before the wedding.
“Present each other with your basic financial information including how much you earn and the sources of that income,” Anastasio says. “Disclose any outstanding debts such as student loans, credit cards, car payments, and mortgage payments. And discuss your spending habits, how much you have saved, where you save it, and how you manage your money.” You’ll also want to get into your respective financial goals and expectations.
Griffin says it’s during these early conversations that you’ll want to learn more about how your partner views finances so you can get on the same page. “It's crucial that you both look at your personal credit history, your credit scores, and make sure they're in good shape,” Griffin says.
With this basic information on the table, she says you and your partner can identify both your shared and independent financial goals, and how to progress. “You may want to start slowly with just a joint credit card for household expenses and possibly a joint checking account before combining everything,” she says. Anastasio urges couples not to be critical of how their partner’s approach to money. Instead, she suggests discussing the roles each of you can play in budgeting, paying the bills and making investment decisions.
The Benefits of a Joint Bank Account
While some people find sharing their credit card debt a bit overwhelming, Anastasio says not to worry. There are plenty of benefits to opening a joint bank account.
The first is that by doing so, you’ll have help managing your shared expenses for a shared life. A recent study done by SoFi and Zola showed 86 percent of newlywed couples are partnering with each other to pay off the debts each brings into the new marriage, Anastasio says. That means you’ll likely also have a partner in tackling your debt going forward.
“If you have a joint savings goal—such as trying to save for a vacation or major life event—it’s harder to know immediately whether or not progress is being made if your finances are not combined,” Anastasio says. “By combining your finances, you and your spouse can create a system of checks and balances to make sure you’re saving on track to meet your combined goals.”
But the advantages aren’t just monetary. “Studies show that couples who completely combine their finances rather than keeping them separate or using a hybrid approach are happier in their relationships,” she said.
And while some of us recall hearing our parents argue over debt and spending, money is not a pressure point for everyone. Griffin says couples these days are more open and even with their finances than couples of previous generations. “We share finances more, our financial knowledge is greater, and we're more equal in that which is by far, one of the greatest changes,” Griffin says. “Seeing one spouse managing the finances is far less common.”
Potential Downsides to Know About
Despite all the upsides, it’s still important to be wary of potential pitfalls so you can avoid them as you combine your lives and finances. Even if most of the disadvantages are related to the initial stress brought on by change.
“One potential con of joint bank accounts is that it may feel drastically different from what you’ve been doing in the past—and more limiting,” Anastasio says. “Sharing a money management account can be tricky if you don’t budget ahead of time with your partner.”
Having these conversations will help you both to tackle problems with credit scores and existing debts, which will take on new significance when you combine finances. While your buying power for major expenses such as a home or car will likely increase, lenders will now be looking at each of your credit histories, Griffin says. While you and your partner will each maintain your individual debts and credit scores, banks will consider both for joint loans, and any joint accounts that you enter into will appear both credit reports. “Your spouse's credit history is going to affect your financial reality,” Griffin adds.
Know Your Options
How you approach money can take many forms, and Griffin says he’s seen all manner of methods.
“Some couples will have all of their credit accounts as joint accounts, they'll have joint bank accounts, and they'll manage their finances together,” he says. “Others may have a single joint account from which they pay primary expenses, and then separate accounts for themselves for other kinds of expenses. Others may divide the financial responsibilities of the household between them and pay for those things out of separate accounts.”
Anastasio insists that once you decide how to proceed, you’ll want to maintain regular communication about your financial situation. (We love the idea of having a scheduled, monthly money date.)
“Your money—like your marriage—should last for the rest of your life,” she says. “Having a conversation about money shouldn’t be something you only do once when initially combining finances. It should be a continuing dialogue the two of you share throughout your lives.”