The I do's of Combining Finances

Samantha Eckhardt,

July 25, 2014

Managing Your Money


As a single person, decisions about managing your finances are entirely up to you.  You have the liberty to choose how you will prioritize and pay bills, what your savings goals will be, and how you will invest your money. Once you get married, however, those important choices are no longer solely yours. Studies show that finance-related disagreements significantly raise the risk of divorce.  Fortunately, this doesn’t have to be the case.  While there is certainly no single solution to the problem, both spouses taking an active role in the management of their finances is a great place to start.

Here are some valuable tips if you are about to tie the knot, are newly married, or are just plain tired of fighting about your finances:

Step 1: Lay It All Out.

Find some time to sit down together, free of distractions, to discuss all personal financial information. Gather your bank statements, investment information, a summary of all liabilities, and don’t forget those monthly bills. Once you enter into wedded bliss, you agree to take on each other’s debts and assets. It is important to begin looking at these as “ours” instead of “mine” and “yours.” Remember, if one of you has less than perfect credit, it can affect you both equally when trying to make large purchases (like a car or a house) together in the future.


Establish your financial goals together. Maybe you’d like to pay off debt, save for a down payment on a home, or travel the world someday. You may also want to think about if and when you have children. Children come with additional expenses such as diapers, clothing, food, and daycare. No matter what your aspirations are, making these compromises together will help you effectively communicate about money. A desire to achieve the same end result will keep you focused and help you through rough times. Because guess what? There will be rough times. An open line of communication can be the best tool to make certain your financial ambitions are met.

Step 3: Create a Household Budget.

Design a budget that is specifically tailored to your income and expenses. This budget worksheet is a great place to start. Knowing how much money is coming in is usually the easy part, however, calculating your monthly expenses can be tricky. The first step is to determine what your fixed costs will be. These are expenses that occur each month, wherein the amounts stay relatively consistent. It’s a good idea to include certain bills that occur annually, like vehicle registrations, and set money aside for those expenses throughout the year. Here are a few things to remember to factor in:

  • Mortgage/rent
  • Utilities
  • Debt payments
  • Insurance (life, home, auto)
  • Vehicle registration

Next is to look at your saving habits. For some, it’s helpful to think of your monthly savings amount as a bill. One great trick is to set up automatic deposits into a savings account. This will ensure that it happens each month, without fail.

Now on to discretionary spending. Determine how much you have left for things like groceries, gas, and entertainment.  Make sure this amount is realistic. Underestimating these costs will cause you to consistently go over budget, while overspending will take away from the opportunity to pay down debt or allocate more to savings. Also, remember the adage: “The more you make, the more you spend.” Each time you or your spouse receives a pay increase, make sure to adjust your savings objectives accordingly.

Step 4: Review Your Bank Accounts.

If you haven’t done so already, now is the time to open joint checking and savings accounts. The checking account should be where all of your fixed expenses and debt payments are taken from. Making these payments automatic will help avoid late fees which can damage your credit.

Now to decide where your paychecks go. While some couples find it works best for all income to be combined into a joint account, others feel it is more appropriate to deposit paychecks into individual accounts and then transfer to the joint checking account accordingly. Based on your goals and situation, you should determine what you feel would the best option.

It’s common for spouses to have two very different salaries, so you will need to agree on how the income will be broken down. Some couples choose to divide the household budget evenly while others might split the expenses and savings based on what each spouse earns. For example, let’s say Joe earns 40% of the total household income and Jane earns 60%. Jane may then transfer 60% of the expenses/savings to the joint account and Joe 40%. This article outlines some different approaches to combining accounts. Next, review your discretionary spending budget and establish what will be paid for individually and what should be part of your joint budget. Regardless of what you choose to do, it may be beneficial to have smaller individual accounts for certain discretionary items.

Step 5: Who’s in Charge?

Of the finances, that is! Someone will need to be responsible for physically paying the bills each month to avoid late fees. Remember, setting up automatic bill pay can make this process much smoother and less time consuming.

Step 6: Keep Up the Conversation.

Though you may have completed steps 1-5, unfortunately you are still not done. It is important to maintain an ongoing dialogue with your spouse about finances. Pledge to have a monthly meeting to discuss bills, debt, and savings objectives. This will guarantee you stay on track with your budget and are taking positive steps to reach your goals! Finally, keep in mind that budgeting is never done. Over time, as your careers evolve and your family grows, changes will need to be made to your financial plan to ensure your making the most of your money. 

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This blog article is for informational purposes only, and is not an advertisement for a product or service. The accuracy and completeness is not guaranteed and does not constitute legal or tax advice. Please consult with your own tax, legal, and financial advisors.