Now that you’re married or have decided to commit to your future as a couple, you may be wondering if you should combine finances — and how. While this is a highly personal decision that each couple needs to make, if you decide to combine finances, there are a few things you should know to make the process smoother.
But first, let’s discuss why commingling finances is a good idea.
Why Should You Combine Finances as a Couple?
Even for couples who have a healthy income and the same money values, combining finances can seem intimidating. Especially if you come from a family where finances were always kept separate — or, at least, controlled by one parent — it can feel weird to share everything financial. The truth is, though, that combining finances is one of the best ways to support your relationship. Why? Because it can:
Make budgeting and “overviews” of income and expenses easier
Give you shared goals and decision-making
Offer more transparency and honesty
We’re not saying you’ll never fight about money or that all your money problems go away when you combine finances. But it can help make it a lot easier, and make you feel more connected.
As a couple, you can work together to figure out if you want to combine finances 100%, have separate “fun funds” with discretionary funds to spend as you funds, pay some bills separately, or if you want to slowly combine finances as time goes by. There is no one way to “combine finances,” as this great Forbes article explains.
But if you do decide to combine finances, you may be wondering what steps to take. Here are a few suggestions.
How to Combine Bank Accounts
Decide if you want to open a new joint checking and saving account, or move one person to the other’s existing account. To do this, all you need to do is contact your bank to put the other person on the account, or go into the branch or online to set up the joint account.
Whether you use debit cards or credit cards, you will also need to get new cards to connect to your new (or transferred) account. This is usually pretty simple; debit cards will be mailed with your new account and credit cards can easily be applied for online.
Once accounts are moved or created and you have your new card numbers, make sure all direct deposits and expenses are redirected to the chosen account.
Contact your accounts payable or human resources team at work and make sure your direct deposit is redirected to the new account number.
Go online or call each of your current expenses to make sure they charge your new account. It helps to keep your old accounts open for a while during this transition, so you don’t miss any payments.
Set up a budget that shows your new combined income and expenses. Together, you’ll be making more than you did alone, but you’ll also have more going out. Make sure you have a budget that includes:
Transportation (car payments, gas, etc.)
Expected grocery bills
Other expenses that you pay
This will help you see if there are any duplicate payments, like 2 Netflix subscriptions. It will also show you what the other person has going out and what will be left over each month, which can guide future financial decisions and help with emergencies.
Then, once you’ve combined your day-to-day finances, you can start thinking about bigger picture finances.
Get on the Same Page With Retirement Accounts & Funds
Commingling finances should also include retirement accounts, larger investment funds, or savings accounts, if you have any. This step can take a bit more time, so it’s OK to do this after everything with your bank accounts and daily finances has settled down.
Co-managing retirement funds
An important thing to note here is that you can’t “combine” retirement funds by simply adding your spouse and their retirement funds to yours. Instead, you will need to contact the firm that holds your account to make your spouse the beneficiary. You may also want to shift retirement funds so that you can manage them in one place — together.
For example, if you have an old 401k from an old employer(s), you can combine those old funds into a new IRA or other retirement account you can manage together, possibly under the same service or Certified Financial Planner. Of course, only one person can be on the account, but the idea is to have transparency around what’s being saved and contributed between both spouses.
Then, you and your new spouse can get on the same page with your retirement and see what your retirement picture looks like together.
Focusing on what you need to retire together
Getting married changes retirement: Before, you just have your own retirement funds, but now you may have two or more. That can dramatically change the picture. Or it can go the other way where one person has been saving and the other person hasn't. It's also possible that one person can save through a 401k and the other person can't and has to look at other options, even though saving for retirement may be a priority. There are a lot of variables to consider with retirement funds after marriage, so make sure to look at all options!
The other really big thing here is that this is a great time to re-evaluate how much you are saving for retirement. Many people have an increase in their disposable income at this point and could save more for retirement. That’s why it’s always best to work with a Certified Financial Planner at this stage of your finance combining efforts, to make sure you’re setting aside the right amount of money so you can both retire well.
Insurance Plans and Other Important Documents
Another part of combining finances is making sure that your spouse has access to and benefits from the resources you already possess. This could mean:
Making your spouse the beneficiary of your life insurance policy and retirement accounts
Making sure you have enough life insurance to protect your spouse and any current or future children
Updating your new name on accounts, if you are taking on your spouse's last name
Changing your address if you’re moving
Aligning investments and savings (emergency funds, retirement contributions, etc.)
Deciding to keep separate healthcare plans or choose one “family” plan
Creating wills and estate plans together
While these aren’t necessarily tangible financial components, they do ensure that your status as a couple is reflected across the board.
To Combine or Not to Combine?
Hopefully, the suggestions above make combining your married finances much easier. Of course, deciding how much to combine your finances is a “team decision,” so make sure to go over this list to determine what you are both comfortable with. There is no one-size-fits-all approach to combining finances, so do what feels best. Also, don’t be afraid to take your time; rushing this will only cause oversights and errors, and you don’t want that!
If you want to get a better grasp on your money as a couple, check out our couple’s money resources. We also talk about other newlywed money conversations you should be having, so make sure to check those out.