Managing Finances as a Newlywed Couple: Combining or Separating Approaches

YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE: MONEY TALKS FOR NEWLYWEDS
As the wedding season approaches, many couples embark on a path toward marriage. One of the most important conversations newlyweds will need to have is figuring out how and who will pay the bills. The goal is to ensure that the bills are being paid, especially on time, so both partners remain current with their finances and keep their credit intact.
Money may not be the most exciting topic to discuss with your new partner, but it’s a must-do conversation. According to a recent study by the Institute for Divorce Financial Analysts (IDFA), 22% of all divorces are due to money issues. Having an active dialogue and a plan can help strengthen couples’ bonds.
Here’s how some couples approach this task, which is extremely personal:
1) Combining finances like marriage itself
Many couples find it best to address their bills as they have approached their marriage—they look at commingling their finances in the same way that they combine their lives. The couple would set up a joint account for their household expenses where all of their income is deposited, and then use this account to pay their bills and fund emergency savings accounts.
This approach provides transparency as both partners can see how much money comes into their shared account each month and what it’s being used for.
2) Separate but equal
Other couples prefer keeping things separate from a financial perspective, while maintaining individual accounts where all of their respective pay is deposited.
In this scenario, the couple agrees to divide certain household expenses based on who will be responsible for them—one member may take care of mortgage payments, taxes and insurance, while another handles groceries, utilities or home maintenance. This method can provide transparency as well if both parties prefer that approach.
3) Combination: individual accounts with a joint contribution
Another popular way couples manage their finances is by combining some elements of the first two methods discussed above.
Each partner maintains individual bank and credit card accounts, but they contribute an agreed-upon amount each month to a shared account. This common fund would be used for all household expenses—the couple may take turns managing these payments or split responsibility as well.
Whatever method couples choose is critical that it works for both parties involved in the relationship. There must be agreement between them, similar to so many other things in relationships, and they should stick with this approach unless adjustments become necessary due to their evolving situation as a couple.
Paying bills on time will save you from paying interest or late fees while maintaining individual credit scores or boosting your combined score. It’s important for couples not only have financial plans but also follow through and maintain communication regarding finances over time.
— By Lawrence D. Sprung, certified financial planner and founder/wealth advisor at Mitlin Financial Inc., who has been featured in The Wall Street Journal, Bloomberg TV, CNBC, NBC News Better, Money Management Magazine and other media outlets.