The following post is from Melissa Batai
One of the major decisions you need to make after getting married is whether or not you should merge finances with your partner. While most couples from the Baby Boomer generation merged their finances, less Gen X and Millennial couples do. “Overall, 64 percent of all married people had combined their finances” (BusinessInsider.com). While the choice is up to you and your partner, merging your finances can have many advantages.
Marriage Is about Being a Team
The most successful marriages are those where both partners work together toward shared goals and communicate with one another. If you merge your finances, you must learn to be on the same page financially and to discuss savings goals and spending plans. True, this may not be easy at the beginning of your marriage, but over the years, you will both evolve and find you are on the same page financially.
For instance, my husband and I did fight about money during the first five to seven years of our marriage, but now, after 20 years of marriage and combined finances, we rarely fight about money. We have each changed and are in almost complete agreement about our financial goals and spending priorities. If we had had separate finances, I don’t think this would have happened.
Easier to Get Ahead Financially
You may have heard the saying, “Many hands make light work,” and that’s true when you combine finances. For instance, if one partner has $8,000 in student loan debt, you can tackle that debt together and eradicate it much faster if you’re working together to do it than if you’re working alone. Likewise, your assets will accrue much faster when you’re working together and using both of your incomes.
Make Decisions Together
As I mentioned above, merging your finances together naturally makes it easier to make decisions together. If your finances are joint, but you spend $1,000 without consulting your spouse, your spouse likely will not be too pleased. However, if you discuss this purchase and make a plan to save for it, chances are, your spouse won’t be upset.
If your finances are combined, you must work together, which can make your marriage stronger.
Budgeting is much easier when you have joint finances. All of the income is put in one account and comes out of one account. If you have separate finances, you must move money from the separate accounts to the joint accounts to pay joint bills like the house payment. Some couples with joint accounts even decide what percentage each partner should pay based on the percentage of income they bring to the marriage. Having merged finances is much simpler.
Accommodates Career Bumps
As a married couple, you should defend and protect one another. By having joint finances, you can accommodate one another’s career bumps and downturns. For instance, for the first ten years of our marriage, my husband was getting his master’s degree and then Ph.D. He brought in very little income. Now, for the last 10 years of our marriage, he’s been the primary breadwinner, and I bring in only about 15% of our income. Because we have joint finances, we can accommodate these income differences. We also have flexibility while raising our children. At first, he was the primary caretaker, and now I am.
There can be many advantages to merging finances as a couple. However, be aware that the transition may be challenging at first, but after a few years, as your relationships deepens, you should be on the same page financially. Once you are, having joint finances is much easier and less complicated than having separate finances.
My Question for You
Do you have joint or separate finances? Why? Which do you prefer? Can you suggest any other reasons for having joint finances?