Yours, mine, and ours: Tips for merging your newlywed finances
Filed under: Negotiating Speed Bumps, Relationships, Budget Advice, After the 'I Do's'
When my husband and I first set up house together, we had two checking accounts, one in his name and one in mine. We made a big deal about how this separate accounting was just FINE for us! Because we had a good relationship and great communication! We don't need no stinkin' joint checking account!Until a few months in when I realized that because I wrote all the household checks, I was paying all the household bills. Out of MY MONEY. While my husband was buying camping gear with his money. And then, it was not so fine.
Money can be a deal-breaker in a relationship; in fact, the three things couples are most likely to fight about are money, sex, and family. Fortunately, if you are proactive about your finances, you can avoid the money fights. The Street's Michael Katz offers five tips for merging your finances, using the "due diligence" business model. He suggests things like discussing your financial goals and being honest about your credit debt. The article is worth a look; however, I would add a couple of things.
1. Designate someone to pay the bills. Having ONE person who does the bills every month assures that they will get paid. The non-bill-paying spouse should have full access to the records, but keep the system simple by putting one person in charge. Because the easiest way to miss a car payment is for you to assume he's sending the check while he assumes you are.
2. Be specific about your financial plans. Do you want to send your kids to private school? Take one elaborate vacation every year? Have a housekeeper once a week? Any discussion of a budget needs to include both long-term and short-term goals. If you both want to retire at 40, or pay your house off in 20 years, you need to decide that right now and budget accordingly.
3. Be honest about your spending. I have friends who sneak new shoes or new clothes into the house when their husbands aren't looking; I am incredibly uncomfortable with this, even if they can afford it. Your spouse doesn't need to know what everything cost, but if you find that you are hiding your spending from him, then that's a sign of a potential problem.
4. Create a system that works for you. My husband and I spent years trying to work out a financial system that worked for us. Currently we have some accounts that have both our names on them, some that belong to only one of us, and one that is specifically for our children. We have also divided the labor of caring for our money: I do the day-to-day, while my husband manages the long-term. We talk about both frequently; I know exactly how much is in our retirement accounts, and he knows what we spend on groceries. Don't be afraid to tinker with your system to get it just right. What works for one couple may not work for everyone, but it is important that you know how the money is being spent.
2. Be specific about your financial plans. Do you want to send your kids to private school? Take one elaborate vacation every year? Have a housekeeper once a week? Any discussion of a budget needs to include both long-term and short-term goals. If you both want to retire at 40, or pay your house off in 20 years, you need to decide that right now and budget accordingly.
3. Be honest about your spending. I have friends who sneak new shoes or new clothes into the house when their husbands aren't looking; I am incredibly uncomfortable with this, even if they can afford it. Your spouse doesn't need to know what everything cost, but if you find that you are hiding your spending from him, then that's a sign of a potential problem.
4. Create a system that works for you. My husband and I spent years trying to work out a financial system that worked for us. Currently we have some accounts that have both our names on them, some that belong to only one of us, and one that is specifically for our children. We have also divided the labor of caring for our money: I do the day-to-day, while my husband manages the long-term. We talk about both frequently; I know exactly how much is in our retirement accounts, and he knows what we spend on groceries. Don't be afraid to tinker with your system to get it just right. What works for one couple may not work for everyone, but it is important that you know how the money is being spent.
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