Joint Finances as a newlywed couple?

[Tayskiing]

My financee and I are about to get married and just started talking about finances. We both work and both bring in an income.

The question is do we keep separate accounts? Do we set up a joint account? Checking, savings, investment? What are the pro's and con's? Recommendations on how to set up joint accounts (never set one up before)?

She has very little retirement and even less savings.

I have been saving for over 15 years and plan on retiring in 5-6 years and be financially independent.

I am optimistic that this marriage will last so pre-nuptial agreement is not an option.

[mhalley]

My wife and i setup joint and individual accounts. Joint used for household expenses (utilities,cc,loans) etc. individual was for misc individual (atm, clothing, haircut, etc). This worked fine for us. It is easier thsese days with online banking as u don't have to worry about the spouse forgetting to write down a check or atm wd).
The buggest thing is how much you each contribute to the joint account if there is much of an income disparity.
Investment was joint for taxable plus individual iras.
If you setup individual checking account, you can add the spouse as authorised signature.
http://money.usnews.com/money/personal- ... g-accounts
http://budgeting.thenest.com/authorized ... 26211.html
Mike

[Tayskiing]

You definitely bring up a good point. The amount we put into the join account.... not sure about that.

Maybe we both get a stipend in our individual account and the rest goes in the joint?

How do you determine how much each person puts in?

[mhalley]

The first thing that comes to mind is that each contrbutes the percent they bring in. Say you have $2000 a month expenses. You bring home 1000 a month and spouse brings home 2000. If you both put in half, you would have no money leftover for your misc. expenses, and spouse would have 1k. But if you put in a third, and spouse 2/3, then you both have extra for misc spending. Of course this could be affected by lots of things, say one of you had a large car loan or maybe child support, or one does not want to save.The key is deciding on a plan that you both think is equitable. You would want to setup a budget that you both agree to.

Mike

[denovo]

Either arrangement can work. I think the most important thing before you get to that is I hope that you have had more than one long discussion about finances and make sure that you have compatible goals. You indicated she has little in savings or retirement. Is that because she is a lot younger than you or that she has a lower income? To retire early, you'll likely to have a high savings rate. That means compared to your other co-workers who may spend every penny they have and more, you may not have as nice of a car or house. I am sure you already experience that or some of the comments that come your way because of that. Is she ok with that? Even children are a financial issue, although much more than that. The number of children you have and how you want to raise them (private schools ,etc) will have a big impact on your finances. You need to see eye to eye on all this before even getting to separate or joint accounts. You'll have problems with either set-up if your financial goals aren't in line.

I know you've ruled out an a pre-nup and that will derail this thread since it's a heated topic, but look at the search engine for this site and read the pro's and cons. One thing you should keep in mind, you already have a prenup. Here is one of the old threads. viewtopic.php?f=2&t=163227&start=50#p2452430

[Tayskiing]

Yes, for sure we will have multiple discussions on this. I do think that we do have similar financial goals. She is same age as me but make less.

Being financially independent to me means that I don't have to work and be financially ok. I may find a job here and there to supplement but since I plan and hoping at retirement to do full time missionary work as a family, we will have very little expenses.

As for kids, I don't and didn't know how to really budget for that. That depends upon so many factors.

I think I'm getting the trend though... Talk to the future Mrs and have many discussions on what's best for us.

[denovo]

Yes, for sure we will have multiple discussions on this. I do think that we do have similar financial goals. She is same age as me but make less.

I think you need to have multiple heart to heart discussions on this way in advance of marriage. These are important issues, don't make assumptions about shared goals. How much you plan on savings, which will dictate what kind of home, car or vacations you can afford , retirement (how early), children, especially if you plan on doing something like missionary work!!

As for kids, I don't and didn't know how to really budget for that. That depends upon so many factors.

It's not a matter of budgeting for kids per se. You already know that the only part of having children that is free is the procreation. Just understand that obviously having children cost money, especially depending on how many you have. Your joint income can go down (if she's out of the workforce) and your expenses go up , may need a bigger house, another mouth to feed, possible private school etc, babysitter. All of this impacts your finances.

I think I'm getting the trend though... Talk to the future Mrs and have many discussions on what's best for us.

Yes, and I guess compromise is the key word for a lot of this, but depending on how your ages, some people already have ingrained philosophies on this stuff.

Joint vs sep. accounts is trivial, discussion of the above stuff is way more important.

[Tayskiing]

Copy all.
Thanks for all your inputs.

[VGisforme]

She has very little retirement and even less savings.

I have been saving for over 15 years and plan on retiring in 5-6 years and be financially independent.

I am optimistic that this marriage will last so pre-nuptial agreement is not an option.

This seem very odd how old are you? Are you factoring in suppor of your future wife and kids into your 5 year retirement plan or will she need to keep working to normal retirement age because she has t saved much?

Just seems like a weird thing to say going into a marriage especially when kids are anticipated unless you've already socked away a significant sum. Perhaps your Missionary lifestyle will have such low expenses that it will work?

[ImaBeginner]

In my family, we throw everything in one pot, and just spend from there. I make a lot more money and am pretty big on saving (>70%) but she is lot more frugal than I am, so we actually have never had money arguements.
My friends' family does it a way that I think would work well if you have a less aligned view. He makes 50% more than her, but they both put all into a joint account, used for all joint expenses. Then they both get the same amount out as an "allowance" each month into their own checking accounts. They can spend or save this, but the only rule is that they are not allowed to complain about anything bought out of the others' personnal account. He uses his on fishing stuff and a trip, she likes clothes and spa days.
I am not a fan of unequal rights to money, but every couple is different. I feel not splitting evenly sets up a unequal relationship with either a more dominant partner or sets up a parent child type relationship where one has to ask the other for money. In my mind that isnt what marriage is for, but again everyone feels different.

[jpelder]

In my family, we throw everything in one pot, and just spend from there. I make a lot more money and am pretty big on saving (>70%) but she is lot more frugal than I am, so we actually have never had money arguements.
My friends' family does it a way that I think would work well if you have a less aligned view. He makes 50% more than her, but they both put all into a joint account, used for all joint expenses. Then they both get the same amount out as an "allowance" each month into their own checking accounts. They can spend or save this, but the only rule is that they are not allowed to complain about anything bought out of the others' personnal account. He uses his on fishing stuff and a trip, she likes clothes and spa days.
I am not a fan of unequal rights to money, but every couple is different. I feel not splitting evenly sets up a unequal relationship with either a more dominant partner or sets up a parent child type relationship where one has to ask the other for money. In my mind that isnt what marriage is for, but again everyone feels different.

I think the second idea is the best, personally. My wife and I have all joint accounts, and have mostly shared budgets (clothes, groceries, bills, etc.). We also have individual lines that we call our "random" money. This is the idea of the "allowance". We can spend or save however much we want, and the leftover rolls over from month to month. This works for us because her income is about half of mine, and we came into the marriage with roughly equal assets. We can both see what the other spends, and all of our income is really our income, not "mine" and "hers"

[Bill M]

We started out with separate accounts (~40 years ago, so memory is somewhat fuzzy), and did careful accounting of utilities (split 50/50), mortgage (split 50/50), credit card bills (split based on who bought what, and food etc 50/50), gas/fuel charges (split based on who drove and how much), etc. It was far more trouble than it was worth.

So we just put everything into a common joint account; everything paid straight from that account. Any personal items, beyond some threshold ($50 back then) we talked about first.

[Van]

I would suggest that nearly 100% of people getting married do so thinking that it will last, but the statistics reveal about a 50% divorce rate (I think that is correct, and I'm sure to be corrected if it is not).

GET A PRENUP.

[prudent]

I like the discussions that come up on this topic from time to time because we can see examples of so many different methods being used which helps to spark ideas in people working on this issue.

But the right answer can only be whatever the OP and spouse agree suits them best... whatever system that is.

[Toons]

My thoughts.
Married means that.
Joint Accounts.
If you can't trust your spouse with money whats the point.

I am optimistic that this marriage will last so pre-nuptial agreement is not an option.

Optimism reigns supreme,,,,,,but
Get a prenup

[Morik]

My wife & I have only joint accounts, joint credit card, etc. We make very different amounts of money (her 1/5th vs me 4/5ths of the household income).
The 4/5ths has a better retirement plan at work and so has a lot more retirement savings, but assuming we stay together (we have been married for 8 years, together for 12, pretty sure we are good) it doesn't really matter.

When we first got married I had maybe $100k total assets (80k taxable, 20k retirement? Maybe a bit more retirement, I forget), she had I think -10k to 0k assets (some debt, a little in a retirement account).
Didn't prenup.

I would think about a prenup if there are very substantial differences in assets at the start (e.g., if I had $1m assets, maybe prenup... $1b? Certainly)

Basically you need to figure out some ground rules. What kinds of spending do you want to discuss beforehand? (Can one of you just sign up for a $500/year gym membership? Buy a used car for $3k? Go drop $2k on a hobby?)

I know a couple who has completely separate finances and they STILL fight about stuff like that; the guy (who makes more) will go drop $150 on a meal + drinks somewhere, she'll find out, and get pissed at him even though their finances are separate.

So essentially:
- How do you each think about money & tend to spend money?
- If its different, figure out (ahead of time) how to deal with situations that are likely to come up
- budgeting is your friend.

On budgeting, give YNAB a shot maybe? If you sit down and budget together, that will likely head off most major incidents.

[mptfan]

I am optimistic that this marriage will last so pre-nuptial agreement is not an option.

Are you implying that you should only consider a prenup if you are pessimistic about your marriage lasting? Do you think that people who are optimistic about their marriage lasting at the time they get married never get divorced?

[chrisr0916]

My Fiancee and I are similar to a lot of the people posting here. I make more than her, and most likely will for the rest of our careers. After we got engaged we created a joint bank account, and that's it. Any money either of us makes is our money, then we each get $100 allowance each month and can save it up and spend it however we see fit.

My personal opinion is that the instant you see it as his/her money, things start to get tense. Someone will always make more than the other. What if she is out of a job for a year? Does she get no allowance then? Conversely, what if she want to eat out but you were fired and are not making any money. Do you get to eat out? What about if she gets pregnant and has minimal maternity leave? Will you make her work so that she can pay her half of the bills? Etc.

Get a prenup if you want. I'm personally of the belief that if you're willing to marry someone, then it's 100% trust and vulnerability, but that isn't the point here. (EDIT: Granted, I am not a millionaire nor did I get engaged with a trust fund in my name, so I do have much less to lose than others who do sign prenups. Maybe I'd see differently if that were the case.)

TL;DR just do a joint account with allowance.

[vitaflo]

I think I'm getting the trend though... Talk to the future Mrs and have many discussions on what's best for us.

This is the only correct answer. Everyone's financial situation with their spouses are different. What works for one couple would not work at all for another. You need to figure this out with her and what you're both comfortable with.

The fact that you haven't had these conversations yet is a bit concerning to be honest.

[Morik]

I think I'm getting the trend though... Talk to the future Mrs and have many discussions on what's best for us.

This is the only correct answer. Everyone's financial situation with their spouses are different. What works for one couple would not work at all for another. You need to figure this out with her and what you're both comfortable with.

The fact that you haven't had these conversations yet is a bit concerning to be honest.

FWIW we didn't have any such discussions before we got married... I don't know if I'd classify it as "concerning". Most people just don't really think about it that often. (The impression you'll get on this board has some bias to it, as the people who frequent bogleheads think about their finances more than the general population does. At least, I'd be willing to bet a whole lot of money on it.)

That said, yes do have that discussion.

[prudent]

We didn't discuss it very much before marriage either. We talked about goals and plans and dreams, but not the nuts and bolts of handling the family finances. Looking back I think that's because we intuitively knew we'd just throw it all together in joint accounts. We had nothing (I mean nothing!) anyway, and joint accounts seemed to be the simplest method. As our assets grew, we didn't see any reason to change.

I can understand it would be different if both people came into a marriage with money.

[englishgirl]

What I've been thinking about would work for me and my bf but may not work for everyone. But anyway, here's another option - we both get paid every 2 weeks, so out of the month we can put one paycheck into the joint account and one paycheck in our own accounts. The joint account can pay for all housing, food, and joint vacations, and the individual account can pay for anything else like IRA's, cars, shopping, lunches, frivolous stuff, etc. Now, this requires that one set of paychecks from each of you is enough to cover housing and food, which isn't always going to be the case, and assumes things like cars are individual purchases rather than joint purchases. For us that will work at least to start with, and then the more time goes by, the more we can merge finances. We are older though, and absolutely need some sort of pre-nup and will being drawn up, to make sure that things we already own go to the right place in the event that we split up or one or both of us die prematurely.

[Dulocracy]

Since the computer deleted a rather long post, and since I do not have time to re-type it, I am editing this to say sorry for the mis-post.

[amarone]

We didn't discuss it very much before marriage either. We talked about goals and plans and dreams, but not the nuts and bolts of handling the family finances. Looking back I think that's because we intuitively knew we'd just throw it all together in joint accounts. We had nothing (I mean nothing!) anyway, and joint accounts seemed to be the simplest method. As our assets grew, we didn't see any reason to change.

I can understand it would be different if both people came into a marriage with money.

We are "second time around" and came into the marriage with money. We kept existing investment accounts as they were, but moving forward all income went into one joint account and we opened new joint investment accounts. Initially, I earned a lot more but I am older, and now retired so she now earns more. We have similar views on money and don't set specific budgets for our own spending. It works for us.

The one thing that could seem a little odd is buying gifts for each other. My wife recently had a "milestone" birthday and I arranged a nice gift and trip. So I spent a decent amount of "our" money, most of which she brings in these days, and yet it was my gift to her.

[Jeff P]

Assuming you are in a community property state, all the money either of you makes is 50% the others anyways.

Keep your pre-marital savings in a separate, individual account. Don't comingle. Do whatever works best for you with all post-marital earnings.

[crg11]

We've had joint finances since we married 8 years ago. So far so good. We track it all in YNAB daily, so there is nothing that sneaks by either of us, which also has the nice side effect of limiting unnecssary spending that the other wouldn't approve.

We also did away with separate savings accounts awhile ago in a quest to simplify things and it hasn't caused any issues either. If someone wants to buy something for themselves, we chat, consult YNAB, and see if it makes sense or not with our budget.

[PlayingLife]

We got married and created joint accounts...I had all the savings and make much more than my spouse, so to be honest it did take me a while to adjust to thinking of everything as "one pot". It also bothered me (and still does sometimes), when I can't buy something because we are following a budget, when I know a few years back in the single life I could buy whatever I wanted.

HOWEVER....I think the joint account is much stronger for our marriage, and it works really well overall as long as you are strong enough to think of the two of you as one unit. Plus I highly recommend tracking monthly expenses and reviewing them together once a month. If someone spends much more one or two months in a row in a certain category, no big deal. But if there are some trends out of whack, the expense tracking lays groundwork for a much easier conversation and hopefully better understanding between you are your spouse. Congrats and good luck!

[Lafder]

We started as non married with a his and hers check book. When living together we made a joint account to pay shared bills, and also kept our own.

Over time it was me paying bills from all of the accounts.

We ended up with 3 joint accounts by adding each other to the original solo accounts, and all joint credit cards that I handle bill paying.

At some point we made all taxable investment accounts joint. (I came in with about 25k, he came into a small inheritance around 50k so we put both names on both)

Then we got married. Everything is in both names that can be. I still pay bills. I still keep multiple checking accounts at the same bank for record keeping. But I transfer between them as needed. We do not use debit cards since we never remembered to write withdrawals down.

We have a 200$ rule which is we are "supposed" to discuss any purchases over 200. We actually still use it even though we made that rule when 200$ meant a lot more than it does now.

Luckily we do not fight over money and both are careful about spending. We both splurge from time to time and tell each other about it.

We only spent $30 for the marriage license, maybe 100$ on breakfast, under 2000$ on rings, and wore clothes we had. But you should spend whatever feels right for you and your wife to be !

lafder

[hq38sq43]

Best regards,

[baudwalk]

Looking back on 50 years of marriage and the separate and joint accounts back when, I cringe. The paper trail was obscene. It is so much easier with our one joint account as part of our brokerage account. It includes BillPay and a Gold card. At most, I may write 2 or three paper checks a year. A few apps on a smartphone and tablet rule.