How We Combined Finances for Marriage
Every time I post one of my monthly budget breakdowns, I inevitably get the same question:
Is this just for you, or for you and your husband?
Then, the follow-up:
How come you two haven’t combined finances yet?
And while I wish I had a juicier, more sinister answer for you, the truth is: Inertia.
My husband and I are 28 and 26, respectively, and we’ve both been managing our own money for several years. He had a system that worked for him, and I had a system that worked for me.
It didn’t help that we had lived together for about a year before getting married: We had the “roommates splitting expenses” thing down, making it even easier to carry on with the status quo post-nuptials.
Why we decided to combine our finances
We went back and forth for a while (pre-marriage) about what type of system would make the most sense for us: Initially, we thought a “yours, mine, and ours” play might work, wherein we’d both contribute some money to the metaphoric pot for joint expenses but then hang onto the rest of our income individually.
That sounded good in theory pre-marriage, but after legally binding ourselves together until death, we felt that – for us – it just felt like a more complicated version of the “roommates who split everything” plan we were currently enacting. What’s the point of adding an intermediary step where we both put money in the same account if we’re just putting in our respective halves of the costs we’re already splitting?
After we legally tied ourselves together, the idea of trying to keep things separate just didn’t seem as important. (That’s not a recommendation, so please don’t take it as such. It just reflects the reality of how we both felt after saying, “I do.”)
Before long, the inertia that kept us splitting things and maintaining separate systems started to cause more annoyance than seamlessness.
(And by “long,” I mean about 5 months.)
Keeping track of who paid for what and sending Venmo requests back and forth felt like we were just shuffling the same money back and forth in an obnoxious game of Monopoly, because – we both acknowledged – we consider our assets shared now.
In other words:
If everything I own is now his and vice versa, then who cares who paid for groceries and who paid the electric bill? It’s all “ours” anyway.
The frustration of having to maintain creative accounting for seemingly no reason is what pushed us to make the decision: Are we financially aligned, or not?
Fortunately, we had a lot of conversations well before we were engaged about our goals.
Our goals?
Retire from traditional work as millionaires in our early 30s and figure it out (when we set that goal, we had no idea how we were going to do it yet, but we knew that’s what we wanted).
Neither one of us has a spending issue, neither one of us has any debt, and we both came into the marriage with (coincidentally) near-equal assets.
It was a relatively easy conversation, then, when we were determining whether or not we should combine.
Questions to ask yourself when deciding whether to combine finances
I’d say these are the general questions you want to consider:
Is either partner coming in with significantly more wealth or significantly more debt? If so, is that information fully known between you? How do you each feel about that? Some couples are cool with helping one another pay off debt; others would prefer not to commingle finances in that situation.
Do you want the same things? If one of you plans to stop working at 30 to start a peach stand on the side of the road and the other wants to be a corporate attorney until they’re 65, it’s probably good to share that information upfront. If one or both people have plans to stop working at some point, it’s worth discussing that upfront – the obvious question being, “Are you cool with your income supporting us if I stop working, or should I plan to build up savings of my own to live on during that time?”
Do you approach money the same way? You don’t have to have identical money philosophies, but it’s helpful to be aware of where the differences lie. As hard as it may be to believe, my spouse is more frugal than I am. He loves getting things cheaply (or for free) and – as financially conscious as I’d consider myself – I’m far more willing to pay for convenience than he is. Though, importantly, he’s open to those types of conversations (for example, he agreed to the cleaning professionals and chef service, despite having little to no interest in it himself).
All right, back to my situation: once we had decided to combine, then what?
How we started the (tactical) process of combining finances
I can’t remember if we had ever explicitly discussed it when we were dating, but there was always a chance one of us would earn more than the other. My husband is an attorney with a higher earning potential because of his career path, but I gave myself an edge by working a corporate job and starting a business at the same time.
While some people are concerned about out-earning their partner, I have a feeling my spouse and I will trade off in the income department. Sometimes he’ll make more, and sometimes I’ll make more.
The respective incomes (in our case) didn’t really factor into the equation, mostly because (as stated above) we approach money the same way and have the same goal.
Put simply: Our interests are aligned.
It sounds cheesy, but I consider us a team striving for the same goal, and because of that, we determined the first step was opening a joint checking account.
Step #1: Open a joint checking account
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Once we opened the joint checking account, the idea was that we’d both switch our W2 direct deposits to the new account, so all new income is flowing into one shared pot.
(Money with Katie’s business income would go into a separate business checking account and be handled separately.)
What about combining all the other funds?
Remember how I said we each maintained our own financial lives for years? That means we both own an array of investing accounts. Rather than trying to go through the cumbersome process of selling and transferring assets around, we decided to simply add each other as the beneficiaries on one another’s accounts, and then start anew together.
This means we retained control of our respective investments (he dabbles in cryptocurrency and I do not, for example) that we obtained prior to getting married (and, I suppose, for 5 months after).
If there were a seamless way to combine all of it, we would’ve – but when you’re talking about a dozen separate individual investing accounts, it would’ve been more trouble (and more of a tax bill) than it’s worth.
So there you have it: Opening our first real joint account and re-routing our W2 paychecks was step #1.
Step #2: Open a joint taxable brokerage account
We both have our respective retirement accounts (that can’t be joint, because they’re legally designed to be “individual”), but the majority of our investing each month happens in a taxable brokerage account (no contribution limits, baby!).
Rather than continuing to contribute to our respective individual brokerage accounts, we decided to open a new one. We had a conversation about asset allocation and basically settled on the equity strategy we were both comfortable with and set it up in the account.
For example, with Betterment, you can set your joint investing account that is based on your goals. Just tell them your goal type, provide a little information, and they will handle the rest! Any cash that’s contributed will be automatically distributed appropriately (here’s an article about how to set up joint accounts within Betterment and the ins and outs of joint accounts).
Every month, our money breaks down like this:
Expenses
Contribute the maximum to retirement accounts (his TSP, my 401(k), my Mega Backdoor Roth IRA)
Contribute any excess to the joint taxable brokerage account
That brings me to step #3…
Step #3: Set up the partner spending plan to align on expense goals
Ah, the most fun part (genuinely) – filling out the 2022 Wealth Planner together!
His boring black-and-white spreadsheet is replaced by a pink, graph-laden miracle of a Google Sheet. Isn’t he so lucky?
For a lot of our expenses, it was easy – rather than both allotting $1,500 to rent, we just allotted for $3,000.
For others, we had to discuss what we were comfortable spending. For example, we both had individual travel budgets, but now that we were combining, we had to be comfortable with the fact that sometimes one of us would be traveling without the other and would be using a joint budget to pay for it.
(To be honest, this is still something that makes me feel a little bit funny – even though intellectually I know we’re a team, the idea of my partner using our income to pay for a boys’ trip bugs me a little. This is why money is so interesting – you can decide intellectually that you’re comfortable with something, but your emotions in the moment might say something different.)
We decided to allot “individual” budgets into the joint budget. In other words, we each get $200 per month of “no questions asked” money to spend on whatever we want. One of us wants to go out to eat but the other doesn’t want to spend our restaurant budget that night? Cool! Use your “no questions asked” money.
It’s something we decided to bake in so we wouldn’t have to consensually agree to every single purchase. If he wants to buy new boots, I don’t have to worry about where that money’s coming from. I would recommend baking in some monthly spending money for each individual that isn’t necessarily part of a “joint” budget.
And on that note…
Step #4: Retain some individual funds in personal checking or savings for the beginning
For us, we both had some cash on hand (about $9,000 in a savings account for me).
Rather than retroactively combining existing funds, we decided to just apply our new system to every dollar that came in moving forward.
This meant we each had some cash available to us in our individual accounts from our “old” system, which made me feel comfortable as a bit of a buffer. For example, the capsule wardrobe that set me back $1,100 in one day last month? I would've wanted to use my own personal funds for that.
Long-term, I’m not sure if that’s something we’ll just get more comfortable with. I can’t imagine being 20 years into marriage and still being like, “Ah, I gotta use my personal savings for this purchase!” Eventually, I think it probably all just starts to feel like joint money.
Growing up, my parents definitely discussed big purchases (and sometimes one ended up putting their foot down). My parents are still together and retired in their fifties (not that their financial approach is the reason why, but it worked for them).
In summary: We set up a new system of combined finances for moving forward, but didn’t retroactively combine accounts
The crucial thing to note here is that we are treating these accounts as joint property, even though the physical funds haven’t been literally combined under one digital roof.
This means that when we do our net worth checks, we’re now counting a joint net worth (composed of his original assets, my original assets, and our new joint assets) and considering the entire pot shared.
This is another thing that “feels” a little strange to me as an only child who was never good at sharing, but again, because we came in with nearly equal assets, it’s really like I’m doubling my money via marriage. Cool, right? Love that for me!
All that to say: I don’t blame you if you’re coming into a partnership with significantly more (or significantly less) and feeling weird about it. What’s important is expressing that you’re feeling weird to your partner in a sensitive way, and being transparent at each step in the process.
Speaking of transparency, my partner is not as comfortable with being financially naked in front of tens of thousands of people (what’s wrong with him?!) as I am, and in fairness, he didn’t sign up for that.
So while I’m comfortable sharing my numbers, my future money updates will likely stick to our spending and my income (instead of revealing a joint net worth, as that would make him uncomfortable).
After a certain point, I don’t think it’s as important to post net worth updates as a blogger. It’s exciting in the beginning to see progress, but I don’t necessarily think any value will be lost for readers by that detail going unmentioned.
In my mind, once you hit a million, it’s less exciting for everyone else.
But who knows? Maybe after being married to me long enough, my husband will decide to be a personal finance blogger, too. A girl can dream.
