A Guide to Combining Finances After Engagement or Marriage

2/1/2025

Getting engaged or married is an exciting milestone, and it often comes with discussions about combining finances. With love in the air this month, it’s good to keep a clear head when making joint decisions about your finances.

Managing money as a couple can strengthen your relationship, but it also requires careful planning and honest communication. Let’s explore key considerations for merging finances, addressing income disparity, managing bills, saving, setting goals, and protecting individual assets. Couples typically choose one of three approaches to managing their finances.

Fully Combined Accounts: All money is pooled into joint accounts for bills, savings, and spending.

Partially Combined Accounts: Both partners contribute to a joint account for shared expenses while maintaining separate personal accounts for individual spending.

Separate Accounts: Each partner keeps their finances independent, splitting bills and responsibilities proportionally or equally.

The best approach depends on your preferences, trust level, and comfort with financial transparency. Many couples start with partially combined finances to maintain some independence while sharing responsibilities.

Joint Accounts vs. Separate Accounts

Having joint accounts can simplify bill payments and promote transparency, but maintaining separate accounts can preserve financial independence. A hybrid approach—where a couple has both joint and individual accounts—is often the best of both worlds. Here are some pros and cons of each.

Joint Accounts

Pros:

• Simplifies managing shared expenses.
• Encourages teamwork and trust.
• Facilitates goal setting and saving together.

Cons:

• Less privacy for personal spending.
• Can create tension if spending habits differ.

Separate Accounts

Pros:

• Maintains financial autonomy.
• Reduces potential conflict over individual spending.

Cons:

• Can complicate shared expenses.
• May hinder open communication about finances.

Addressing Income Disparity and Bill Payments

When one partner earns significantly more than the other, deciding how to split expenses can feel challenging. Here are two common approaches.

Proportional Contributions: Each partner contributes a percentage of their income to the joint account. For instance, if one partner earns 60% of the household income, they pay 60% of shared expenses.

Equal Contributions: Each partner contributes the same dollar amount, regardless of income.

Proportional contributions tend to be more equitable and allow the lower-earning partner to have more discretionary income. Open communication is critical to prevent resentment and ensure both partners feel respected.

Building an Emergency Fund Together

An emergency fund is a non-negotiable part of financial stability. Couples should aim to save 3–6 months’ worth of living expenses in a liquid, easily accessible account. Initially, decide on a joint savings target and timeline.

Automate contributions to a designated emergency fund account. Don’t forget to revisit the fund regularly to ensure it reflects your current cost of living. For couples, who choose to keep their accounts separate, each can maintain their own emergency fund or contribute proportionally to a shared one.

Setting Financial Goals as a Team

Financial goals provide direction and unity in your money management. Learn more about setting SMART goals here.  Setting goals together can provide a unifying force in your financial life.  Schedule regular “money dates” to discuss progress and adjust goals as your priorities evolve. Below are some great goals to consider as you plan your future together.

Short-Term Goals: Save for a wedding, honeymoon, or a new home.

Mid-Term Goals: Pay off debt, save for a child’s education, or invest in career development.

Long-Term Goals: Build retirement accounts, plan for early retirement, or save for major purchases like a vacation home.

Protecting Assets and Inheritance

Marriage doesn’t mean you lose ownership of your personal assets or inheritance, but proactive steps can help safeguard them. A Prenuptial Agreement can outline how assets and debts will be divided in case of divorce.

If you have an inheritance, or come into one, avoid depositing inherited money into a joint account. This will prevent it from being considered marital property. Should you divorce at a later date, your inheritance cannot be divided as other assets in your marriage. Keep clear records of assets owned before marriage and any financial gifts or inheritance received.

A professional can provide tailored advice on asset protection, especially in cases involving large disparities in wealth or family business ownership.

Communicating About Money

Open and honest communication is the foundation of successful financial planning as a couple. Discuss financial topics regularly including spending and saving habits, financial fears and goals, boundaries around personal and joint money. Keep an eye on your budget and your goals together. Importantly, avoid assigning blame for past financial mistakes, and instead, focus on building a solid financial future together.

Combining finances is a deeply personal decision that requires trust, communication, and compromise. By addressing income disparities, managing expenses equitably, saving for emergencies, and protecting individual assets, couples can build a financial partnership that strengthens their relationship. Whether you choose joint accounts, separate accounts, or a hybrid approach, the key is to work together as a team to achieve your shared and individual goals.

 

 

 

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