credit & debt

Newlyweds: How to Blend Your Finances

Figuring out how to blend your finances means fewer things to fight about.

Whether you're newlyweds, soon to be wed or an old married couple, money is at least as important to a balanced, happy marriage as love and sex. Money is a common cause of conflict -- and even divorce -- among couples. Blend your financial lives successfully, and you are more likely to have a happy marriage.

Because opposites attract, combining money-management styles that conflict is among the greatest challenges married couples face. Early and frequent communication is critical, says Cathy Pareto, a financial adviser in Coral Gables, Fla. That includes discussing your debts, income, credit history, investments and goals. "You've got to meet in the middle," Pareto says. "Otherwise, I promise you there will be fights."

Starting out. The first conversation could be an uncomfortable one. Maybe one of you has a low credit score or a lot of credit card debt. Or perhaps you have significant differences in your approach to spending and saving. Until you've had plenty of honest dialogue, set the ground rules and built the trust you need to put your money together, Pareto recommends keeping accounts mostly separate. "Better to wait to commingle than to do it too soon and be unpleasantly surprised to learn that you have an irresponsible partner."

You may be able to make do with an informal split of your finances. Alec Papazian, 27, and Brooks Heckner, 31, of Cambridge, Mass., who plan to marry this summer, have been living together since 2006. They have no shared accounts or assets, so they divvy up their mutual expenses.

To account for a gap in their earnings, Heckner pays $75 more in rent each month. Papazian pays the utility bills, and Heckner covers the cable and Internet. Then they eyeball most of their other expenses to determine a fair split.

Shannon Hancock, 33, and Scott Knight, 42, who are getting married in September, are more comfortable with the prospect of combining accounts. They chat monthly about their individual budgets, which Hancock expects will help with their transition to budgeting as a couple. They plan to open a joint checking account, from which they could pay their mortgage and other bills, and sign up for a joint credit card.

After the honeymoon. Especially after you buy a house and have kids, it makes sense to merge more of your finances -- although most financial advisers recommend that you each keep at least one credit card in your own name and have access to some money that you can spend without having to consult your spouse (you should check with each other about large purchases). Since Julie Billing, 37, and her husband, Greg, 39, of West Milton, Ohio, got married more than 14 years ago, they have stuck to a strategy of merging their bank accounts. Julie usually handles the bill paying and budgeting. Having such a "family CFO" is a common way for couples to handle expenses, says Pareto.

Talk frequently about your plans, and don't let your emotions become stumbling blocks. Doug Pauley, a financial adviser in Austin, Tex., says sometimes it can help to consult a financial counselor or a financial planner you both trust, who can add perspective and help defuse arguments.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 25 Cheapest U.S. Cities to Live In
places to live

The 25 Cheapest U.S. Cities to Live In

Take a look at our list of American cities with the lowest costs of living. Is one of the cheapest cities in the U.S. right for you?
October 13, 2021
15 U.S. Cities With the Highest Average Home Prices
real estate

15 U.S. Cities With the Highest Average Home Prices

Home prices have rocketed higher across most of the country, but housing costs are acutely painful in these 15 U.S. cities.
October 20, 2021

Recommended

Saving for College? Everything You Need to Know About 529 Plans
529 Plans

Saving for College? Everything You Need to Know About 529 Plans

529 plans offer considerable convenience and potential tax savings when putting money aside for education. That said, there are still a range of rules…
October 22, 2021
Should I Use Credit or Debit?
Basics

Should I Use Credit or Debit?

Credit cards offer more protections and rewards, but debit cards reduce the temptation to overspend.
October 4, 2021
Negotiate a Better Deal
Smart Buying

Negotiate a Better Deal

For a price break on a number of products and services, all you have to do is ask. But first read up on tactics the experts use.
September 30, 2021
New Buy Now, Pay Later Options
Smart Buying

New Buy Now, Pay Later Options

If you’ve been considering a BNPL plan, make sure the credit card in your wallet doesn't already have you covered.
September 29, 2021