How to combine finances after marriage

Any big decision in a marriage takes compromise and communication, whether you’re deciding where to live, if you’ll have children or where you see yourselves 10 years down the road. Financial decisions can present some especially sticky challenges for couples—even those who feel like they’re on the same page about most other things.

A recent survey found that 1 in 4 couples cite money as their greatest relationship challenge, and 45% of couples argue about money at least on occasion. It’s a sentiment that Shannon Baustian, Private Wealth Advisor with U.S. Bank, has seen firsthand. “Money can be an emotional issue,” Baustian says, “and it’s one of the top triggers for conflict.” 

Deciding if—and when—you’d like to combine your finances with your spouse can bring up complicated yet necessary conversations about how to navigate both you and your partner’s financial expectations.

The good news is that you don’t have to struggle through those conversations alone. Let’s review questions to ask when contemplating merging your finances, the pros and cons of separate vs. joint accounts, and how to determine the best financial path for you as a couple. 

Considerations for combining finances before marriage

The first step in planning your financial partnership is sharing your financial histories and goals for the future. Set aside time to have these discussions when both of you are in a calm state of mind. If you’d like someone to guide you through the process, a financial advisor can help you navigate these conversations.

Assess individual financial situations

Baustian recommends that couples start by presenting a clear picture of what income, debts and assets they’ll be bringing to the marriage. You may also want to discuss your general spending habits and overall financial outlook.

If differences arise, don’t sound the alarm bells. It’s common for one person in a relationship to be more of a spender, while the other is more of a saver. By discussing these financial habits early, you may be able to better identify the areas where you can complement each other and help each other grow.

“It’s ideal to come into that conversation with a stance of curiosity, asking questions without judgement and letting the other party share what’s on their mind,” Baustian says.

Establish shared financial goals and priorities

Next, take the time to define some shared financial goals. What is it you value most and want to prioritize in your new life together? This could be anything from saving for a house and starting a family to traveling and retirement.

“What you’re doing is putting together a financial partnership—and you have to decide how you want that partnership to operate and what each party will need for their own security,” Baustian says. 

Choose the right combination

When it comes to combining finances after marriage, each couple must decide what makes the most sense for them. “There may be some people who are eager to have everything joined and operate together, and some who feel better maintaining separate accounts,” Baustian says.

Here are some tips to help you choose the right financial approach for your relationship:

Joining bank accounts after marriage

According to a recent survey from Marketwatch, joint banking is a common practice among married couples—and can even lead to greater relationship satisfaction. It’s easy to see why: A joint account allows you to transact more freely from the same pot of shared resources. Joint bank accounts also provide a level of transparency in a relationship; neither party is left out of how much money is coming and going out of your shared account.

“From an operational standpoint, it’s often easier to transact from a shared account,” Baustian says. “It provides ease of use.”

However, potential challenges for joint bank accounts may occur if there isn’t proper communication about budgeting and how you make financial decisions as a couple. It’s crucial to be on the same page about what types of purchases or bills the joint account will fund and how spending decisions will be made. If you’re not in alignment here, unexpected purchases could lead to conflict. 

Maintaining separate bank accounts in marriage

Maintaining separate accounts might be the right approach for couples who either have significantly different spending habits or who simply want to maintain more independence. Yes, you lose out on the financial ease of operating one joint account, but couples who maintain separate accounts can still collaborate on specific goals—like retirement planning or saving for a vacation—while preserving their financial autonomy.

Baustian has seen a “best of both worlds” approach work well in the past: having one joint account and ancillary, separate accounts for each person’s discretionary spending. 

Practical steps to combining finances after marriage

If you do decide to merge your finances, there are a few practical steps to take before you combine your assets.

Decide how you will fund your joint account

First, it’s crucial to go over how money will flow in and out of the joint account so there are no surprises. Couples have options to choose from here, too, such as opting for automatic funding and deductions to pay your bills, or perhaps just using the account to pay for specific purchases.

“You can decide whether you want default funding, meaning both of your paychecks get deposited in the account and then the money gets siphoned out to separate accounts, or maybe there’s a set amount of dollars that’s expected to go into the joint account to manage operating expenses each month,” Baustian explains.  

Create a joint budget and track expenses

Next, come up with a joint budget for your account. If you’ll both be transacting from the account, both parties should be aware of how much money you will allot to different spending categories, from entertainment and groceries to short- and long-term savings goals.

It may also be important to decide on an amount you both feel comfortable having in the account in case of emergencies, with both parties agreeing not to let the account fall below that number. Better yet, consider setting up a separate joint emergency fund in a high-interest savings account.

Ensure your estate plans are updated

If you’d like your new spouse to be the beneficiary for any assets if you were to die, update this information now, in addition to putting estate planning documents in place. “At a minimum, no matter your income, everyone needs a will, healthcare directive and financial power of attorney in place,” Baustian says.

Having these documents in place can help your spouse and family in the event that something happens to you or you become unable to make financial decisions or manage your account.

Baustian also notes that trusts can be helpful in many circumstances to help avoid the probate process—what can sometimes be a long, costly, and public situation. “As your wealth grows, or if children enter the relationship, then trust planning does make a lot of sense,” Baustian says. “Having your assets in the name of a trust helps your family or people who are settling your estate in navigating the orderly distribution of your assets without having to incur the court costs or attorney fees associated with the probate process.”

Decide whether a prenuptial or postnuptial agreement is necessary

Baustian encourages couples not to shy away from prenuptial or postnuptial agreements, especially if one or both are bringing substantial assets to the relationship. “I think prenups get a bad reputation,” Baustian says. “I see these as tools that can help you navigate your financial partnership.”

If you come into a marriage with existing property or a portfolio of stocks you’ve received as part of an inheritance, for example, you’ll want to clarify how you treat those assets.

“The prenup can be a great place to gather that information, share it in good faith with each other and create an agreement of how you’ll treat those separate assets should things not go as planned,” Baustian says. 

Should you combine finances and bank accounts before or after marriage?

If you do plan to combine your finances and create a joint account, you may be wondering about ideal timing to make the merge. Should you combine your finances before walking down the aisle? Or is it OK to wait until you’ve sent out the thank-you notes and settled into your new life together?

Just like your financial goals and plans, the timing of merging finances is unique to every couple and dependent on several different factors.

Merging finances early on can help build trust and transparency in the relationship, as well as making it easier to work together toward your financial goals. This can be the case if you live together before you tie the knot.

But if you know it will take a while to come up against a major shared purchase together, such as buying a house, there may not be a huge rush in creating that joint account.

“The timing may be unique for each couple, but in general, when you start to have more combined expenses than separate expenses, that’s when it’s likely makes the most sense to combine your finances,” Baustian says.

Ensuring financial harmony after marriage

Creating a solid financial partnership starts with being open and honest in your conversations—but those conversations aren’t a one-time occurrence. You should review and adjust your financial strategies on a regular basis to make sure you’re accounting for any changes to your income, financial goals or life circumstances.

“It’s not a set-it-and-forget-it situation,” Baustian says. “Things change, life changes, and opportunities present themselves.”

Baustian encourages people to seek professional advice if needed—since doing so can help you get on the same page about one of the most important factors in your marriage. By keeping communication open from the start and working through some tough conversations, you’ll be able to create a more solid foundation to grow your financial partnership for the future.

When it comes to managing your finances, you don’t have to go it alone. Learn about our approach to financial planning.