Whether you're soon-to-be-married or have already tied the knot, married finances can be one of the stickiest topics for couples. If you want to improve your chances of a happy marriage, then getting on the same page about money is crucial.
Your first step is to talk about it. Choose a time and place to share an open conversation with your partner. Prepare to discuss money habits, financial goals and even (or especially) debt. Only with that knowledge can you decide how to handle your money as a couple. While there isn't a one-size-fits-all solution, below are three models to consider while creating a plan that's best for you.
The All-in Model
This is perhaps the simplest form of married finances. Both partners pool all their money together in joint savings accounts and checking accounts. They also add each other to existing credit cards. This means shared savings, shared income, and shared debt.
For many, this “what's mine is yours and what's yours is mine," model is not only the most clean-cut way to merge their finances but also the most meaningful. It symbolizes their total commitment to and acceptance of each other. But, like committing your life to someone, it does require a healthy amount of trust—and a shared financial vision. Before jumping in with both feet, make sure both partners have a clear idea of the other's financial situation. This empowers you to agree on a joint money plan. Decide on your saving and spending strategy. And if joining finances means one partner will help take on the other's debt, agree on a payment strategy now to prevent arguments down the road.
The Venn Diagram
This model allows couples to keep everything separate while allowing for shared expenses. Couples who choose this path often start out with lopsided debt and/or simply enjoy their independence and want to maintain it as much as possible.
Imagine a Venn diagram in which each of you make up a circle with a small overlap in the middle. On your separate sides, you can maintain your own savings accounts, checking accounts, credit cards, and debt. In the middle, you have shared expenses that overlap, like housing, groceries, and utilities. Some couples remain extremely separate, never opening a joint account but rather dividing up their shared expenses. Each partner owns sole responsibility for certain bills. Others put a percentage of both incomes into a joint account opened for the sole purpose of paying shared expenses. Either way, the rest of their income is theirs to save or spend as they please. While that provides more freedom, it can complicate saving up for shared goals.
If you select this model, consider the difference in your incomes. The partner with a smaller income should be responsible for a smaller percentage of shared expenses. While it may seem fair, keep in mind that the model doesn't create equality. Unless both partners make roughly the same amount of money, the one with less income will always have a smaller amount of expendable money left over, even while paying a smaller share of the expenses. So, consider how that might affect your relationship, given both your personalities.
The Hybrid Model
For couples who enjoy their independence but also want the practicality of shared finances, the hybrid model may work best—especially if children are involved and up the ante on shared expenses. Essentially, this model is based on the “all-in" model, but each partner gets their very own account to save and/or spend. The couple's total income goes into a joint account, out of which expenses are paid. Then an equal amount of spending money can be transferred into their separate accounts. Couples should only transfer money into their separate accounts after all their bills, automatic savings and debt payments are taken out.
Money is the number one thing married couples fight about. So, if you can get on the same page with your spouse financially, you can drastically reduce the number of potential arguments.
