Published in: Banks | Sept. 16, 2019

The Newlywed's Guide to Merging Finances

By:  Kailey Hagen

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Don't forget about your finances when joining your lives together.

Marriage brings many lifestyle changes, the most important of which have to do with finances. You may now have two sources of income coming into your household, but you may also have new expenses and debts -- and a partner with different spending habits that you have to accommodate. 

This can be stressful at first, but it's important to make a plan for how you and your spouse will handle finances. That way you won't run into problems when an unexpected expense comes up or when one of you buys something the other thinks they shouldn't have. Here are four things all newly married couples must do to start their financial life together off on the right foot.

A bride and groom kissing underneath a flower arch.

Image source: Getty Images

1. Create a budget

The first step is to take stock of your expenses, as this will determine how much extra cash you have to spend on discretionary items. Include your living expenses, such as housing, utilities, insurance, and food. If you were living together before you got married, you probably have a sense of how much these things cost, but if you're just moving in together, you may not. 

Many of your expenses will probably go up because you now have to pay for two people's living expenses instead of one. Your spouse may also bring student loan, credit card, or other types of debt into the household, and you need to have a plan for how you will pay this off as well. Your household's new combined income could affect your monthly payments on income-driven student loan repayment plans, so keep this in mind if you have student loan debt.

2. Decide who will pay for what

Some couples split living costs 50/50, while others each contribute to a more proportionate share of the bills. For example, if one spouse makes $60,000 per year and the other makes $40,000 per year, they split the bills 60/40. You could also select certain bills that each spouse is individually responsible for, or have one person pay for everything. Putting all of your earnings into a single bank account is also an option if you're both comfortable with this. 

There are no right or wrong answers here. It's all about what works best for you as a couple. Talk it over and decide which strategy you prefer. You may try it out for a month or two and decide it doesn't work the way you thought it would. In that case, try another approach until you find one that works for you. You may have to adjust this strategy periodically as your expenses or income change. 

3. Decide how to handle discretionary purchases

Once you've covered your basic living expenses, you must decide what to do with any money that's left over. You may want to save some for your long-term goals, such as buying a home or a car, but you're going to want to spend some of it on fun activities and purchases as well. It's important to have a strategy for handling these so that one spouse doesn't get angry at the other for buying things on their want list.

You may decide that any money left over after paying your living expenses is yours to do with as you please. Or you could pool all of your money together and assign yourselves a monthly discretionary spending limit. If you'd like to purchase anything over that limit, you must get your spouse's permission in order to do so. This gives you both the freedom to buy new clothing or go out to eat, without feeling like you're being micromanaged by your spouse -- while still curbing any tendencies to spend too much on things you don't need.

4. Open joint accounts

You may prefer to have joint bank accounts for your joint expenses. But you may also want separate bank accounts for your personal funds if you're not combining everything. You can keep your money for bills in a joint checking account and money for an emergency fund or for big-ticket purchases in a joint savings account

It's not always easy to have an honest conversation about money with your new spouse, but it's crucial that you do. Finances can be a common source of stress in a marriage, but you can ease this stress considerably by having a plan that both partners are comfortable with and agree to stick to. Check in periodically with one another to determine how your plan is working and where you might need to make some adjustments.

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