One of the big issues a lot of couples deal with when they get married is, of course, money. Should you just merge your finances after marriage? Or is there a better way? It turns out there are a lot of different ways to handle finances, and only you can figure out which one is right for you.
Merge All Your Accounts
On paper, the simplest way to merge finances after marriage is to open new joint accounts and put all of your money there. You can pay all your bills from this account. This keeps everything visible to everyone – but it also means there are no secrets, so you can’t easily buy the other person a surprise gift. Additionally, one drawback to this method is that some people feel guilty spending on themselves because they feel like they’re taking “family money.” This method tends to be much more common when couples marry very young and don’t have much to their names or when one person is a stay-at-home parent.
Pay Different Bills
Some couples opt to not merge their accounts at all, and simply pay different bills. One person might be in charge of rent while the other person takes utilities and groceries. Then each partner has their own responsibility. If one partner makes less money, that person can be given the smaller bills if both partners are comfortable with that.
Split Expenses Equally
Some couples choose to go the “roommate” route and split everything equally. Personally, I think this can be troublesome. Yes, each person is paying the exact same amount, but unless your salaries are also equal or almost equal, this can lead to one person feeling like they never have any spending money while the other person is keeping quite a bit of money.
Split Expenses Proportionally
My husband and I split our expenses proportionally. One of us makes more money than the other, so we split our expenses based on the percentage of total household income. For easy math, let’s say it’s 60/40. Since I take care of our budget, I track all of our household expenses, paid out of our joint bank account and shared credit card. I just use a simple Excel spreadsheet, and at the end of the month, we each contribute our portion of the total, either 60% or 40%. And we can do whatever we want with the leftover funds. We both contribute towards savings, which we discuss as a family as we’re looking at future plans.
Merge and Keep “Allowance”
As our son gets older, I’m thinking we might try to merge to this type of budgeting. In the Allowance style budget, couples merge all of their money but each person keeps back an allowance of spending money, and in this situation, the amount would be the same. After all, much of our money is spent on family expenses, but it would still be nice to have some fun money for ourselves and for gifting. I think this would very much simplify our situation, once we get through the hard part of “how much allowance should we get?”
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Megan is a 30-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.