The big day has come and you’ve found the person you want to spend the rest of your life with. You’re moving in together, combining your stuff, and accidentally sharing toothbrushes. You have it all figured out.
However, what happens when you receive your first electricity bill? Are you going to pay it yourself or ask your spouse to pony up for half of it? If you’re on it, you already have this figured out and have discussed it with your spouse but from what I’ve experienced, most people aren’t on it!
Do you combine your finances with your spouse? Will both of your paychecks go into one shared account to be used by both of you? What about the bills? Are you working together to pay off your debt and work towards financial goals?
My wife and I have fully combined our finances from the start. Luckily, we both had all of our debts paid off when we got married, even though I had previously accumulated $50,000 of debt. This seems to be the biggest sticking point between couples, and oftentimes the spouse with debt is trying to do the “right thing” by wanting to pay off their debt with their own money.
Why do we combine finances?
I don’t think we’re better than anyone who doesn’t combine their financial lives. Some of our good friends don’t combine and seem to be ok, but I still don’t agree with it. When I like to be mean, I ask people if they refuse to combine finances so the divorce won’t be as messy… people always like that!
Below are my top 4 reasons you should combine your finances:
1. You get on the same page with short-term and long-term financial goals
2. It forces you to discuss the hard topics
3. Financial infidelity (hiding purchases) is still infidelity
4. How will you split your finances if you have kids? Only pay for the one you like most?
How can you start combining your finances?
Many people enjoy living with separated finances because they feel like they deserve to control the money they earn. If you think combining finances means “giving up power to the other person”, then there’s some other stuff you need to work through that we’ll discuss later. In short, the debt becomes both of your debt, and the income becomes both of your income when you get married.
The first thing you should do when combining finances is get on the same page. You need to discuss short and long term goals and determine how you’re going to use your money. Do you want to pay off your debt, start your emergency fund, or save for a big vacation? After you’re on the same page with goals, I’d recommend following these steps to take control of your money:
1. Complete a current assessment
2. Track your spending
3. Create a spending plan (budget)
4. Monitor plan and adjust as necessary
5. Save some money
6. Attack your debt
The top authority on the subject of combining finances is Dave Ramsey. Check out his great article on, “The Truth About Money and Relationships” for more information or read his book, The Total Money Makeover.
The most important part is to have continual discussions about your money with your spouse. Ramsey recommends a monthly budget discussion, but sometimes it’s hard to stay on top of it. We also use a cash budget which helps us stay on top of our spending.
My wife and I are mostly on the same page, but that doesn’t stop us from having “disagreements” on money. If it was up to me, I’d never spend money and would be wearing the same clothes I had in college. She’s cheap, but she’s wouldn’t live off of Ramen noodles like me. She does a good job of making sure I enjoy life… and I force her to think about every purchase :). We’ll see if I can get her to write her opinion on this subject someday…
Do you combine finances with your spouse? Why or why not?