Getting Married? 3 Ways Couples Can Combine Money
Congratulations! You’re tying the knot. Your schedule may be full of preparations for your wedding and through all of this, you’re navigating the tricky question of how to commingle your money.
How should couples combine their finances? There’s no right answer. Every couple approaches this differently. Here are three common ways:
1. Everything Is Ours
One strategy is to go “all in,” pooling together your debts, income and spending into one giant pot. You may consider closing your personal bank accounts and opening a joint account, where all paychecks are deposited and from which all bills are paid. You wouldn’t keep track of who-earned-what — everything is collectively “ours.” Your attitude toward the debts you bring into the marriage is also “ours,” regardless of whose name is on the loan. You wouldn’t distinguish between “your student loans” versus “my car note” — both burdens are yours to share. One benefit of this approach is that you’ll have fewer accounts to manage and fewer inflows and outflows to track.
2. Yours, Mine, Ours
Under this approach, you and your spouse each maintain a personal bank account (“yours” and “mine”). You also both contribute to a joint bank account (“ours”). The money within your personal accounts can get used to wipe out debts incurred before the marriage, splurge on personal items (such as new tools or shoes) and buy gifts for one another or take each other out on dates. Money inside your joint account would be spent on joint purchases, such as your rent or mortgage, groceries, utilities and insurance payments.
Joint Account Proportional Contributions
There are two ways to manage “yours, mine and ours” accounts: you could each contribute equal amounts, or you could each contribute in proportion to your income. Contributing proportionally based on your income may help when one spouse out-earns the other, says Money Magazine.
Joint Account Equal Contributions
Rather than contributing to the joint account proportionately to your income, you’d each chip in a specific dollar amount. For example, each of you could chip in $2,000 per month, and the $4,000 total in this joint account could be used to cover shared bills like your mortgage and utilities. Some couples feel that this is a more fair arrangement — others think it amplifies income disparities. If one partner earns $6,000 per month, for instance, and the other partner earns $2,500 per month, then the higher-income partner would be left with ample discretionary income, while the lower-earning partner would have little remaining after pitching into the joint account.
3. You Get This — I’ll Get That
Finally, you and your spouse could both maintain individual accounts, and agree on which bills each partner will cover. You might pick up the tab for the mortgage, groceries and insurance while your partner pays the bills for your car payments, student loans, utilities and vacations. If you go with this approach, outline your who-pays-for-what plan in a written agreement, says Forbes.
There’s no right way to commingle your money. Every strategy has some benefits and some drawbacks. Discuss all three options with your spouse, and find the approach that feels right for you.