Financial life events require personalized financial advice. One such event is embarking on marital life ushers in many decisions, not least among them being decisions related to merging finances. For many couples, the task of blending individual financial lives into a cohesive strategy can be daunting.

Determining how to combine finances after marriage, the fair distribution of expenses, integration of incomes and savings, and prioritization of joint financial goals are important. While there is no right or wrong answer, embarking on this journey without a clear plan can cause considerable strain.

The Benefits of Combining Finances

Research has consistently shown substantial benefits to combining finances after marriage. Couples who merge their financial resources often experience greater happiness and stability within their relationship.

Specifically, research from the Kelley School of Business found that married individuals who integrate their finances tend to argue less about money and feel more satisfied handling household finances.

Another study "Pooling Finances and Relationship Satisfaction" discovered that pooling money can have a particularly strong positive impact on specific groups, such as low-income couples and those from collectivist cultures. A united approach to money management can lead to potential emotional and financial harmony.

Uniting Your Finances as a Married Couple

When two lives unite in marriage, so can their finances. Couples often grapple with whether to keep finances separate, open a joint bank account, or find a middle ground.

Choosing combined income after vows can simplify household money management and foster a spirit of teamwork. Whether fully integrating every penny or balancing independence with unity, here's how to build a strong financial foundation together.

Step 1: Communicate Openly

The journey to a harmonious financial union begins with open communication. Discussing candidly about financial expectations, past money management, and future aspirations is important.

“Communication is what keeps couples on the same page and feeling like they are solving problems together rather than against one another,” says marriage and family therapist Sarah Epstein.

Couples should establish a routine for these conversations, ensuring both partners can express their views and concerns throughout their relationship. This step is essential for aligning financial philosophies, which can vary significantly between partners.

Step 2: Assess Current Financial Status

Thoroughly assessing each partner's financial status is the foundation for a combined financial strategy. This includes taking stock of assets, debts, income, and even spending habits. During this stage, any differences in financial philosophies have to be addressed. For instance, one partner's conservative approach to saving may clash with the other's liberal spending habits, but recognizing these differences early on can help find common ground moving forward.

Step 3: Deal with Debt and Financial Problems

Debt can be a particularly thorny issue in a new marriage. It's not uncommon for one partner to bring significant debt into the union, which can lead to feelings of financial insecurity. 

Research indicates that consumer debt can strain marriages, often leading to conflict. A study of over 4,500 couples revealed that increasing debt heightened the probability of divorce and escalated financial arguments, diminishing marital happiness. For newlyweds, credit card debt reduced satisfaction, while reducing debt improved marital contentment.

Couples should evaluate whether to address debt individually or as a team and consider the ramifications of each choice on their combined financial future. The issue of financial problems, such as credit card debt or outstanding loans, should be approached with a clear understanding that these challenges may affect the couple's financial plan and, by extension, their relationship.

Step 4: Set Joint Financial Goals

Setting joint financial goals is the next critical step after establishing a clear picture of the current financial status. This may include saving for a down payment on a home, planning for retirement, or simply establishing a shared emergency fund. Both partners need to contribute to these goals and feel invested in the outcome, as this fosters a sense of shared purpose and partnership in the financial aspects of marriage.

Step 5: Create a Joint Budget

Maintaining a household budget can have a profound impact on an individual's emotional well-being, significantly easing stress, anxiety, and frustration. Those who keep a budget report feeling a greater sense of control (62%), increased confidence (55%), and enhanced financial security (52%).

A joint budget is a powerful tool for managing combined finances. It should reflect monthly income and expenses and align with the couple's financial goals. “The beginning of the year is the perfect time to review your financial situation and create a budget to get back on track and achieve your goals,” notes former Chair of the CFP Board’s Board of Directors Susan John. “Determine your monthly income, the amount you spend on essential expenses every month, and allocate the remaining amount between saving, investing, and recreational spending.”

A budget can help regulate spending and ensure that both partners contribute fairly to shared expenses. To aid in this process, couples can use a table or bullet points to categorize expenses and allocate funds accordingly. This visual representation can simplify the budgeting process and help keep both parties on the same page.

Step 6: Decide on Bank Accounts and Credit Cards

Deciding whether to have joint accounts or separate bank accounts is a significant decision for newlywed couples. While some may opt for separate accounts to maintain a degree of financial independence, research cited above suggests that those who opt for a joint account are often happier. Weigh the pros and cons of each approach and consider factors such as convenience, trust, and the logistics of managing shared expenses before deciding.

Step 7: Plan for Retirement Together

Retirement planning is a critical component of a couple's financial life. When two individuals merge their lives, they must also align their retirement goals and strategies. This might involve consolidating retirement accounts or simply ensuring that both partners contribute to their retirement plans in a way that meets their mutual long-term objectives. As marriages progress, it's essential to revisit and potentially update beneficiaries on retirement plans and life insurance policies to reflect the couple's current financial status and wishes.

Step 8: Seek Professional Advice

Combining finances can be complex, especially when considering factors such as children from previous relationships, owning businesses, or significant assets. Working with a financial advisor can provide customized advice that aligns with a couple's unique financial circumstances throughout their marriage. A financial professional can help navigate these complexities, clarify tax implications, and assist in creating a comprehensive financial plan that supports the couple's combined goals.

Step 9: Regular Review and Adjustments

Like any aspect of a successful marriage, financial strategies require regular review and adjustments to stay on track. Life events such as a job change, the birth of a child, or the purchase of a home will impact a couple's financial plan. Setting aside time for regular financial check-ins allows couples to reassess their budget, track progress toward financial goals, and make necessary adjustments to their spending plan, ensuring they remain aligned with their shared financial vision.

Step 10: Legal Considerations

When combining finances, it's also essential to consider the legal implications. This may include discussing and drafting a prenuptial agreement before marriage or a postnuptial agreement afterward.

These agreements can outline what would happen to the couple's financial assets in the event of a separation or financial infidelity, providing clarity and protection for both parties. While not the most romantic aspect of marriage, addressing these legal considerations is a key component of a comprehensive approach to combining finances.

The Aligned Perspective: Combining Finances After Marriage

Combining finances after marriage requires patience, communication, and ongoing effort. Remember, there is no one-size-fits-all solution, and the best approach is one that both partners feel comfortable with and that aligns with their individual circumstances and preferences. With the assistance of a knowledgeable financial advisor and a willingness to work together, couples can successfully navigate the financial aspect of their union and enjoy the many benefits of a shared financial life.