Should You Combine Income With Your Spouse? - Slimmer Payments

Should You Combine Income With Your Spouse?

Newly married couples always wonder if it is the right or wrong decision to combine income with their spouse. Financial decisions can be hard on relationships, and this is one of the first that married couples have to face.

Everybody’s circumstances are different, of course, but the financial experts suggest that all couples consider these three steps before combining their personal finances.

1. Survey the landscape

According to David Wells, a certified family wealth advisor who has worked with countless couples, the first step you and your partner should take is to sit down and compile a master list of all your different financial accounts. You can either separately document these accounts in a simple Excel spreadsheet or just write them down. Each person will list their bank and investment accounts, credit cards and loans, plus any other debt. This also helps you personally get an overview of where you stand financially on your own.

2. Discuss what it means to combine income with your spouse

“Each couple answers that uniquely,” Wells says. When sharing finances with your spouse, it’s important that you’re both on the same page with what exactly that means. Here are some general money management questions he suggests you ask one another before combining finances:

  • Will you share everything or have separate accounts as well?
  • How will you split bills?
  • What are the implications or expectations if one of you makes more money than the other?
  • If you share all finances in one merged account, how do you handle things that each person may want individually?

3. Strongly consider having both joint and separate accounts

How you and your spouse choose to combine your income is entirely a personal decision, but Wells does have his own recommendation that involves having joint and separate accounts.

What he has seen work well for clients is sharing a joint checking account where the couple will deposit both their paychecks. This account is also used for household expenses, like groceries, rent, and bills. Separately, the couple sets up an agreed-upon ‘allowance fund’ for each partner, and a certain amount is automatically transferred from their joint checking to each person’s own bank account.

“Recognize that you are managing a paradox,” Wells says. By sharing finances, you may be combining two contradictory money styles (such as saver versus spender) or two different financial personalities.” He says the compromise of having both joint and separate accounts is a good way for couples to handle what he calls this “I vs. Us” paradox.

 “Allowance funds can be spent no questions asked,” Wells says. “That is one way to manage the paradox of I/us around spending.”

How do you handle personal finances in a two-income home? Please reply using the comments below!

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