How To Combine Finances When Married

A man and woman holding hands on a table with cups of coffee.

How To Combine Finances When Married

Managing money with your spouse is a challenging but important part of bringing two lives together. In fact, how you go about combining finances when married can play a big role in making or breaking the relationship—with money issues implicated in 22% of divorces.

The reason that finance is so central to your success as a couple is that each person’s relationship with money is based on their values, priorities, and goals in life. The act of combining finances after marriage requires excellent communication skills and a willingness to compromise. Future-proof your marriage and your financial wellbeing by following our advice for engaged and newlywed couples.

The Financial Summit and Marital Balance Sheet

Before thinking about how to combine finances when married, it’s important that you and your spouse get on the same page about your expectations and desires regarding how money will be earned, spent, and managed. Ideally, this “financial summit” would take place during your engagement to allow time for working through any big surprises, but it can also be the first thing you do once you get back from your honeymoon.

The Marital Balance Sheet

In your financial summit, you and your spouse can work together to create a “marital balance sheet.” This document—also used in divorces—lists each of your assets and debts to visualize the complete picture of where you’re at as a couple so that you can figure out how to combine your finances when married. Preparing this list also helps you to identify what is “yours,” what is “mine,” and what is “ours” before combining finances after marriage.

Individual assets could include:

  • Bank accounts
  • Investments
  • Business ownership
  • Property (including items of value)

Debts to consider include:

  • Student loans
  • Credit card debt
  • Bank loans (car, house, business)
  • Personal loans

Joint property includes:

  • Engagement gifts
  • Wedding gifts
  • Any income, goods, or property acquired after the marriage

Understanding Your State’s Laws

The state of Texas is a “community property” state, which means that anything acquired before the marriage remains individual property and anything after the marriage is considered as belonging to both parties equally. Exceptions to the “community property” rule include:

  • Birthday gifts
  • Inheritances
  • Family heirlooms
  • Personal injury awards (for non-community property reasons)

When deciding how to combine finances when married, it’s essential for both of you to be completely honest about your assets, debts, and financial goals. Any big surprises (such as a large debt) are much better being declared and dealt with now rather than hiding the truth and putting your relationship and financial health in jeopardy later on.

Making a Plan

Once you know where you stand as a couple, you can start planning how you will combine finances when married. As part of this conversation, each spouse can share their values relating to money and set some first-year financial goals as a couple.

Assign Roles

To keep things fair and give both spouses some responsibility when combining finances after marriage, it can be helpful to divide the areas of financial responsibility. For example, one spouse could be in charge of the household budget and the other spouse could be responsible for taxation and investments.

Make a Budget and Spending Plan

When deciding how to combine finances when married, you will need to decide together how much of your combined income will go toward living costs, debt repayment, short and long-term savings, and contributions to charitable organizations. Prepare a budget together that covers your expected monthly income and where each dollar of that is intended to go. You can then make a more detailed spending plan to assign the “spending” portion of your income to specific goods and services.

Set Rules that Allow Some Breathing Space

As part of your budget, each person can be assigned a certain amount of money each month for “discretionary spending” (the adult version of an allowance) so that you both feel free to enjoy little luxuries without letting them take over your budget.

We also suggest deciding on a maximum limit for purchases. Have a rule in place that if anything costs more than this amount, you must consult with the other spouse before going ahead (no impulse speed boat purchases, please!). This kind of honesty and teamwork when planning will help you to stick to your budget and will also help you to develop a higher level of trust and respect.

Opening a Joint Account

If you haven’t already opened a joint account for monetary gifts and honeymoon funds, account-related decisions will figure as part of your conversations about how to combine your finances when married. The number of separate and joint accounts maintained by a married couple really comes down to personal preference, but having at least one joint account for expenses like rent and bills is a good way to make sure that you’re sitting down with your spouse and talking about money on a regular basis.

Planning for Better and for Worse

The last thing that you and your spouse need to plan when combining finances after marriage is what will happen to your assets and debts in the case of death or divorce. Preparing for the worst can seem unnecessary when you’re just starting out, but with nearly half of all marriages in the U.S. ending in divorce, talking about it while you work out how to combine finances when married is a practical step that could save you both a lot of headache in the future.

In most states, assets acquired after marriage are split 50/50 after a divorce. Exceptions include those listed in the category of “exceptions” or are covered by a prenuptial agreement or special order. In the case of the death of a spouse, state laws define the intestate succession when no legal will has been written.

Schedule Regular Money Check-Ins

Now that you know how to combine finances when married, it’s time to agree on how you will keep track of your finances as a couple. Some couples discuss their spending daily, and others choose to do so weekly or monthly. The important thing is that you keep the communication open and honest to avoid any unpleasant surprises.

Set Yourself Up for Success with A Professional Financial Advisor

Getting your finances right from the beginning will set you in good stead to prepare for a new baby and to teach your children money-management skills from a young age. Contact us to schedule a complimentary consultation and make your plan for combining finances after marriage today!

About Author

ML&R Wealth Management

As Chief Compliance Officer, Sarah Wasaff works to keep our department in agreement with SEC regulations. Sarah joined ML&R Wealth Management LLC in 2015. In addition to her role as CCO, Sarah is the Director of Operations and creates processes to make our team function efficiently. SEC compliance is her specialty.

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