3 Options For Newlywed Money Management

marriage financial planning

A common question we receive at Wela is how newlyweds should deal with finances.

Perhaps one part of the pair doesn’t know how to have a conversation about financial matters with their soon-to-be spouse. She may love to buy shoes and he may love to save, or he wants his “boys weekend money” while she wants everything shared. What should they do?

In the early years of marriage, most couples have to learn to compromise and think, act and plan for "we" instead of "me," and that includes financial matters. Considering a large percentage of divorces happen because of money issues, clearly this piece is crucial to get right but something many couples have trouble agreeing upon.

There is not a right or wrong way to go about this, and it very much depends on the investment/savings personalities of the couple. However, the most crucial step that too many people miss is talking about their finances in the first place. It's important to be upfront about both of your saving, spending and investing styles so that you can then both agree upon a plan for how you want to merge your financial lives. You might agree on all financial topics which would make it easier when making financial decisions. You might not agree on any financial topics, in which case you might agree to keep your financial lives separate, at least for a time, while you both work on finding your financial middle-ground.

Related: Will Getting Married Hurt Or Help My Taxes

There are two key issues that are typically on the forefront of newlyweds’ minds:

What do I do with my/their old bank accounts?What do we do with “OUR” money?

How you answer the second question will help you answer the first. There are three possible outcomes for the second question:

  1. Completely Shared - You both share a single account with both your names on it where all cash flow goes into and all expenses are paid. Typically for this to work so that both spouses are happy, you must both have trust and faith that your partner will act responsibly and not hold the other liable for spending more than themselves.
  2. Individual Accounts & A Joint Account- You each have separate accounts where your paychecks are deposited, plus one joint account for some amount of fixed expenses. The shared fixed expense account would handle all joint bills while the separate accounts would be used at the discretion of the holder. Typically the amount each spouse contributes to the joint account is either based on the percentage of income each is responsible for in the family, or based on the percentage of expenses each is responsible for (this is much trickier to navigate).
  3. Completely Separate - You each have your own separate accounts and identify which expenses each spouse will be responsible for, thereby, keeping a black curtain over accounts completely and maintaining maximum financial independence.

We have seen all three options work. Most often, couples start with the second or third option and slowly migrate with more comfort to the first. Once you've decided how you want to handle your finances moving forward, it'll be easier to decide how you want to handle your old accounts.

Marriage is a learning process. When most people get married, they’ve barely figured out their own finances, much less built trust in how their new spouse handles their finances. To speak with an advisor about which options makes the most sense for you, create your free Wela account today.