Shifting from Single to Married Financial Management
Statistics indicate that the average couple is getting married at around age 27. This means, that each of you has had a few years of independence regarding financial decisions. You earn it and you spend it according to the way you like. Once you go from single to married, though, the good old days of waking up in the morning and deciding what you want to buy or where you want to go are behind you. Now there are two of you and you have to find a way to combine money management habits, savings priorities, and spending goals. If you are not on the same page with these basic financial values, the marriage is going to be rocky and may even fail.
Let’s leave aside for this article the issue of money conflict and go with the premise that you both have the same values regarding the handling of money and the same financial goals. How will you share your income and expenses? The way you handle your checking and savings accounts and payment of the expenses—household and personal—is key to maintaining harmony in your marriage. Below is a discussion of the three most common options that you have for handling your money.
- Single joint account
- One joint account for household expenses plus separate accounts for personal expenses
- Separate accounts
Single Joint Account
After you transition from single to married, you may opt to open a joint account into which your paychecks are deposited and from which all expenses are paid. Money for savings goes into a single savings account.
This works great if you both earn roughly the same amount of money, have the same spending habits and money management skills. You might have to work harder on the partnership approach since with a single account. It is easy to assign one person to handle its management while the other becomes less engaged. After a time, the one less involved can begin to feel powerless, seeding feelings of resentment. Nevertheless, marriage data indicates that this approach produces the least amount of conflict around money matters and helps to build intimacy in the marriage.
A Joint Account for Household Expenses, Separate Accounts for Personal Expenses
At the end of the month, you tally up all the household and joint expenses, such as mortgage/rent, groceries, and shared outings. Each of you will transfer from your solo account 50% of the total or whatever sharing formula you agree to. All the household and shared expenses are paid directly from this account. In a short time, you should have an accurate record of recurring joint expenses, from which you can make a household budget. With this in hand, you can set up an automatic transfer from your separate accounts to the joint account each month. All non-shared expenses are paid out of your personal accounts.
Maintaining a separate account for personal expenses allows you to make those spontaneous expenditures without needing to dip into the joint account or “ask for permission.” But, if one of you has a much higher salary, and therefore more money in the personal account for discretionary spending, problems could crop up. Key is making sure that the sharing formula to the joint account reflects your respective incomes.
Do You Keep Separate Accounts when you go From Single to Married?
Separate accounts can be a good option when you are first married, but as you transition from single to married, you might want to rethink this approach. If you do not have so much experience with each other’s financial management skills, maintaining separate accounts may really not be your best option. With separate accounts, you must be very honest with each other. You need to spend quality time discussing your joint vision for how much to spend and save each month. For the long term, you may not want to continue with this option. Separate money can denude the marriage of its partnership aspect. It can also lead to conflict over an unequal sharing of the burden of building a healthy financial life. This is especially true if one of you earns more than the other. Data shows that couples who keep their money completely separate have the most conflict around financial matters.
In addition to your bank accounts, here are two other financial issues to take into consideration.
- Inherited money. If one or both of you has received an inheritance, it is better to leave this money in a separate account under your name only.
- Credit cards. It is a good idea to maintain one credit card account in your name only. This way, should something unexpected happen, such as illness, death or divorce, you will not suddenly find yourself without the means to access cash or make purchases.
