When the wedding is over: Merging money after marriage
, by Rob Kaufman
When you search online for "list of marriage conflicts", there is always one particular cause of conflict that appears in the Top 5: Money.
There are a number of complex psychological reasons why money causes stress and strife within a marriage. Perhaps one spouse has a fear of not having security; there's a lack of trust within the relationship; there's a fear that one spouse doesn't have respect for the other's monetary values... and the list goes on.
However, this blog is about finances, so the focus here will not be on why there are conflicts but how to help avoid them. Be sure to check out the numerous websites (or local psychologists) if your curiosity leans more toward why these conflicts exist than how to stay away from them. But remember to come back to read the rest of this post because in the end, circumventing the causes of money strife can help strengthen any relationship - especially marriage.
COMMUNICATION. As with any successful relationship, communication is key. And when it comes to money, that couldn't be any truer. It's important to have ongoing conversations about finances: i.e. bill paying, investment strategies, retirement planning, even vacation spending.
Although each spouse might maintain their own credit, debit and checking accounts for personal payments and debt, it's also important to have a joint account. This joint account should be the place where each spouse deposits the majority of their monthly income to pay shared expenses and hold money for investment/savings purposes. As with any shared asset, if something occurs within this account that bothers either spouse, a conversation should take place as soon as possible. Letting an irritant fester only creates an infection, so don't allow enough time to pass for that to happen.
CREATE A BUDGET - TOGETHER. A major problem that causes financial stress within new (and older) marriages is the lack of a budget. If one or both spouses don't know what money is coming in or going out, what bills need to be paid and when, or is uncertain about specific debts and investments, things can quickly break down. It all comes back to communication and sharing money matters on a daily and/or weekly basis. Even personal spending should be discussed. What's an inexpensive purchase to one person might feel the opposite to another. So it's often a good idea to set a purchase limit of $100, for example. If you or your spouse wants to make a purchase over that amount, discuss it first. This will help avoid any surprises or resentment should an unexpected expense arise and there's not enough money to pay for it.
PAYING BILLS. Again, a constant, open discussion here is of primary importance. Once a process and method to paying bills is agreed upon, you can decide what works best for you as a couple.
Is one of you better at handling the bills and the other at investments and retirement planning? To make things easier, each spouse can have specific responsibilities, but it's crucial that both of you know what's going on within all aspects of your combined finances so that neither of you is taken by surprise.
Is one of you making more money than the other? Does an even split into the "joint account" seem unfair? Talk it through and decide if a percentage of take-home pay, rather than a specific dollar amount, seems more equitable. And remember to put some money into an Nothing causes conflict faster than getting into a financial bind without any emergency cash to help ease the stress.
"IT'S MY MONEY." Once married, this phrase doesn't really hold water, particularly if you're going to merge your accounts. Even if you have separate bank accounts for personal items and debt, you need to discuss how these will be funded. Think about what might happen if you get a big bonus at work, deposit it into your personal bank account and start using it to buy clothing, electronics and everything else your heart desires. Your partner, on the other hand, didn't get a bonus and is still struggling to put money into both the personal and joint bank accounts. Can you see how that might cause a problem?
At first it might be difficult to get into the "what's mine is yours and what's yours is mine" mindset, but isn't that what marriage is all about? The sharing of life, love and, of course, assets? It's a big adjustment but in time it will become second nature.
If you want to start preparing a budget with your new (or soon-to-be) spouse, visit our FICO Budget Calculators. It's the first step in creating a smoother, more blissful, future together.