Merging Your Finances after Marriage
So you married the love of your life, but are unsure of how to merge your finances? Yes, talking about money can get emotional, and sometimes it is not easy to express yourself in a way that doesn’t hurt your spouse’s feelings. There is no right or wrong way to merge your finances. Whatever works for the both of you is the best way. It is important to openly communicate with each other about your goals and what is important to you, then build a financial strategy and structure around that conversation. Sometimes it really helps to talk with a neutral third party who can take some of the emotion out of the discussion. You should both be involved and know where the money goes, even if only one of you has a detailed overview of the finances. If one person pays the bills, make sure the other person is kept in the loop so that you are both on the same page. Here is how we structured our household finances:
First, a percentage of income automatically goes into retirement plans (i.e. 401k) and into our joint savings account for long-term expenses (i.e. down payment for our future home, down payment for our next car, a bathroom remodel, our trip to Europe, etc.).
The rest of our income flows into our joint checking account. Most of our joint expenses are paid out of this account, including:
*Health & fitness expenses
*Day-to-Day expenses (groceries, toiletries, joint gifts, dog expenses, etc.)
Finally, we each have a separate checking account that we use for our own personal expenses. These separate accounts allow us to spend money on what is important to each of us without having to consult with the other person. This gives me the freedom to buy Aztecs basketball tickets, and it gives her the freedom to take a girls trip to Las Vegas. How this money is spent is really up to each of us. We each have the same amount transferred to our individual checking accounts every week from our joint checking account. Examples of what we spent from these accounts include:
*Personal Care Services (i.e. hair, nails, spa)
*Shopping (i.e. clothing, technology, gadgets, movies, music)
*Gifts for each other
This system has been working for us, so hopefully it gives you some guidance when you are setting up your own system. Dr. Budgets works with many couples and has seen other options for deciding how much money to transfer to each person. Here are some other options:
*Each person receives a percentage of his/her income instead of equal amounts
*Transfers are made once a month instead of once a week
*Instead of depositing all income in the joint account, each person has income deposited into his/her individual account, then transfers a set amount to the joint account for savings and household expenses.
If you need a neutral third party to help you navigate through the emotional side of setting up your financial system, give us a call at 619-800-3030 for your complementary consultation. Also check out our Facebook page (www.facebook.com/drbudgets) in June for more financial tips for married couples. If you have any questions or comments, please post them in the comments section below or e-mail me directly at email@example.com.