Getting married is one of the most exciting milestones in life, but it also brings a lot of changes—especially when it comes to managing your finances. Many newlyweds wonder how to combine their finances effectively. It can feel daunting, but with open communication and the right strategies, you can set yourselves up for financial success. Here’s a complete guide on what happens when you combine finances after marriage and how to do it the right way.
1. Start with a Conversation
Before diving into any bank accounts or budgeting apps, start by sitting down together and having an honest talk about your finances. This means being transparent about your current financial situation—your savings, debts, and spending habits. It’s important to share not just the numbers, but also how you both feel about money. Are you a saver, and your partner more of a spender? Do you have big financial goals you’re working toward, like buying a house or starting a family?
This conversation helps you understand each other’s financial background and attitudes about money. It also gives you a foundation for how you’ll make decisions together.
2. How to Combine Your Finances
There’s no one “right” way to combine finances—what works best depends on you and your spouse. Here are a few common options:
Combine everything: This approach means merging all your accounts, pooling all income, and paying all expenses from shared accounts. It’s simple but requires strong communication.
Keep some accounts separate: You could keep individual accounts but also open a joint account for shared expenses like rent, utilities, and groceries. This method gives you a balance between independence and teamwork.
A hybrid approach: You might keep most things separate but share one joint savings account for specific goals, like a down payment on a house.
Here's what it would look like in practice
Sarah and Jason recently got married and decided to combine everything. Here's how they did it:
Step 1: Opening a Joint Bank Account
Sarah and Jason both had their own checking and savings accounts before getting married. They both went to the bank together and filled out the paperwork to open a joint checking account. Now, both Sarah and Jason have equal access to the account, and they can each view and manage the account from the app.
Step 2: Deciding Which Accounts to Keep (optional)
Sarah had been with her current bank for years, while Jason was considering switching banks anyways. They agreed to close Jason’s checking account and move his balance to their new joint account. Sarah decided to keep her individual account as a personal fund for small, independent purchases like clothing and hobbies, but she transferred most of her balance into their joint account.
Step 3: Updating Direct Deposits
Once their joint account was open, Sarah and Jason contacted their employers to update their direct deposit information. They made sure their paychecks would now be deposited directly into the joint account, ensuring all their income was going to one place.
Step 4: Setting Up Automatic Payments
Jason had been managing the rent payments, utility bills, and their internet subscription from his old account. To keep things simple, he canceled the automatic payments from that account and set them up again using the new joint account. Now, all household expenses were being paid from the shared account, which helped them both feel more involved in managing their monthly bills.
3. Setting Joint Financial Goals
Once you’ve figured out how you’ll handle your accounts, it’s time to set some goals together. Start with the basics, like creating a shared budget and building an emergency fund with 3-6 months of living expenses. Next, think about longer-term goals, whether that’s buying a home, saving for vacations, or starting a family. These goals help you work as a team and make sure your finances align with your shared future. Here's a great starting point.
4. Learn Each Other’s Money Personalities
Every person handles money a little differently, and understanding each other’s “money personality” can make a big difference. Maybe one of you is a saver and the other likes to spend, or one of you is more comfortable taking investment risks while the other prefers to play it safe.
Identifying these tendencies early on helps you find a balance that works for both of you. For example, you might set up “fun money” accounts for each of you, so you can spend guilt-free while still working toward shared savings goals. The key is compromise—when you understand each other’s financial habits, you can avoid misunderstandings and work together more smoothly.
5. Long-Term Financial Planning Together
Marriage isn’t just about managing day-to-day expenses—it’s also about planning for the future together. Once you’ve settled into your financial rhythm, it’s time to think long-term:
Planning for children: If you’re thinking about starting a family, start budgeting for potential expenses like healthcare, childcare, and even saving for college. Check out this blog for more ways to do that.
Retirement planning for two: Even though retirement accounts (like IRAs and 401(k)s) stay separate, it’s important to coordinate your retirement strategy as a couple. You can also consider opening a Spousal IRA if one of you isn’t working but still wants to save for retirement.
Saving for big purchases: Whether it’s buying a home or taking a dream vacation, be sure to plan for large expenses. Creating a joint investment or savings account for these goals can make things easier.
Regular check-ins about your long-term plans will help you stay aligned as a couple.
6. Insurance: Should You Get on the Same Plan?
Marriage is also a good time to review your insurance options. If both of you have employer-sponsored health insurance, it’s worth comparing the plans to see if it makes sense for one of you to join the other’s plan. Often, combining can save money or provide better coverage.
Don’t forget about life insurance and disability insurance either. If you’re planning to start a family or buy a home, updating or increasing your coverage can give you extra peace of mind.
7. What Investment Accounts Can You Combine?
While certain accounts stay separate—like retirement accounts—others can be combined. Here’s what you need to know:
Joint brokerage accounts: You can open a joint brokerage account to invest together toward shared goals like buying a home or building long-term wealth.
Retirement accounts: Individual retirement accounts like IRAs or 401(k)s remain in your name, but you can still coordinate your investment strategies. You might also want to open a Spousal IRA if one partner isn’t working.
Update your beneficiaries: Make sure to update the beneficiaries on your retirement accounts, life insurance policies, and investment accounts to include your spouse if you want them to inherit these assets.
8. Managing Debt as a Team
If either of you brings debt into the marriage, decide whether you’ll tackle it together or keep it separate. This is a personal decision, but having a plan is key to preventing financial strain.
9. Taxes, Legal Considerations, and Estate Planning
Marriage changes your tax situation. You’ll need to decide whether to file jointly or separately based on your incomes and deductions.
But don’t stop at taxes—this is also the perfect time to revisit your estate planning documents:
Wills and beneficiaries: Update your wills and beneficiaries on accounts like retirement plans and life insurance policies to reflect your spouse as the new primary beneficiary.
Power of attorney and healthcare directives: Make sure you both have updated power of attorney and healthcare directives so that each of you has the legal authority to make decisions if the other is unable to.
Revocable living trust: Setting up a revocable living trust is a good idea for most. This type of trust helps avoid probate, providing privacy and making it easier to distribute assets to your spouse or other beneficiaries like children.
Taking care of these legal matters ensures that both of you are protected financially in the long run.
Conclusion: Tailoring a Plan for Success
Combining finances after marriage can seem overwhelming, but it’s also a powerful way to build a strong foundation for your future together. The key is regular communication and planning—revisit your goals, check in on each other’s comfort levels, and adjust your strategies as life changes.
Remember, finances don’t have to be a source of stress in your relationship. They can actually bring you closer together. That’s exactly why I created WealthBound Advisors—to help couples and young professionals navigate the biggest life transitions and make money work for their lives, not against it. Whether it’s combining finances, planning for the future, or optimizing your investments, we’re here to guide you every step of the way.
Ready to take the next step? Visit us at WealthBound Advisors and let’s start the conversation.
Disclaimer: None of this should be seen as advice. This is all for informational purposes. Consult your legal, tax, and financial team before making any changes to your financial plan.