New Couples, New Rules, New Money Management

A common question we get is surrounding how newlyweds should deal with finances: One of the parties doesn’t know how to have a conversation about finance with their soon to be partner. She may love to buy shoes, and he may love to save. Or he wants his “boys weekend money,” and she wants everything shared. What should they do?

Marriage is a change on many fronts and since a large percentage of divorces end because of money issues, this is one that is crucial to get right. However, we would argue that there isn’t a specifically right or wrong way to go about this and very much of it depends on the investment/savings personalities of the couple.

There are two key issues that are on the forefront of newlyweds’ minds:

  1. What do I do with the old bank accounts?
  2. What do we do with “OUR” money?

How you answer the second question will help you answer the first. There are three possible outcomes for the second question:

  1. Have one single account with both your names on it where all cash flow goes into and all expenses are paid.
    • You have to have lots of trust and faith that both partners will act responsibly and not hold the other liable for spending more than themselves.
  2. Each have separate accounts where your paychecks are deposited, plus one joint account for some amount of fixed expenses.
    • The shared fixed expense account would handle all bills and can be handled pro-rata based on either the percentage of income each is responsible for in the family or based on the percentage of expenses each is responsible for (this is much trickier to navigate).
  3. Each have your own separate accounts and identify which expenses each spouse will be responsible for, thereby, keeping a black curtain over accounts completely and maintaining maximum financial independence.

We have seen all three options work. Most often, couples start with the second or third option and slowly migrate with more comfort to the first.

Marriage is a learning process. When most people get married, they’ve barely figured out their own finances, much less, built trust in how a spouse handles theirs.

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