After the wedding cake is eaten and the thank you notes are written, it’s time to focus on the actual marriage. For many newlyweds, merging finances is the first big decision, one that involves unpacking emotional baggage about money and figuring out what works best for them as a couple.
Traditional rhetoric promotes banking together in marriage. But as families blend and people marry in different stages of life, saying “I do” to joint accounts is not always the right answer.
There are three main strategies for approaching finances in marriage, according to Aditi Shekar, founder and CEO of Zeta, a service that helps couples manage their money together.
All in It Together
“In this model, couples bring all of their assets and liabilities together,” Shekar says, which means joint bank accounts held in both partners' names and accessible to both.
When Maureen Wright married her husband, Patrick, a year and a half ago, they immediately decided to merge their finances into one checking, one savings and one joint investment account – just like their parents did. To Wright, who works as a financial adviser, the advantages of banking jointly included built-in accountability, transparency and simplicity.
Andy Hill and his wife, Nicole, combined their money after getting married nine years ago.
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“From the beginning of our relationship, we both liked the idea of merging our money so we could tackle our financial goals together,” says Hill, host of the "Marriage, Kids and Money" podcast. “I had $30,000 of student loan debt, and she had a $20,000 car loan. When we combined both of our five-figure incomes to make a six-figure one, we were able to eliminate our debt in less than a year by living on one income.”
At different times, one of the Hills has earned more than the other, so their combined accounts reduce any potential headaches that come from spouses earning unequal incomes. Mentally, it’s all their money.
Wright and Hill acknowledge the joining of finances isn’t without struggle.
Wright points out that it can take time to feel like the spending is fair.
“We set a dollar amount that we need to consult the other person on before making a purchase," Wright says. That "helps manage bigger purchases and keep things level.”
Hill advises bringing empathy to your conversations to understand the other person’s point of view on smart uses of money.
Wright and her husband still hold credit cards from before they were married, which they typically don’t use unless it’s a holiday or a birthday. To surprise each other, they'll purchase gifts on those cards and not update any shared budgeting software or spreadsheets until after the event.
Yours, Mine and Ours
“In this newer model, couples merge part of their finances in a joint bank account and put the rest in individual ones (sometimes called an allowance),” Shekar explains.
Elle Martinez, a personal finance author and host of the "Couple Money" podcast, uses the “Yours, Mine and Ours” model with her husband of 13 years. Ninety percent of the couple’s after-tax money goes into joint checking and savings accounts, then the remainder gets put into their individual checking accounts.
“I do want to stress that for us, separate doesn't mean secret. We know the balances on those accounts and if we do make a bigger purchase from it,” says Martinez, who prefers the majority joint approach because it makes life easier between work, kids and projects.
Each person having an “allowance” reduces the nitpicking at each other when someone spends in a way that doesn’t align with the other person’s values. Some couples elect to have the same stipend, while others prorate based on incomes or needs.
A key to this model is to focus on paying all the bills, funding the savings accounts and working toward the shared goals first before splitting off and funding the “yours and mine” accounts.
Keeping It Separate
As the name suggests, this strategy means married couples keep their money completely siloed.
“Usually, they’ll take ownership over various household bills (internet) or responsibilities (child care), so they can divide expenses between each other without having to merge accounts,” Shekar says. “While this model might require more work and coordination, it also allows for the maximum amount of control for each partner.”
Amanda Kay and her husband kept money separate when they moved in together and never bothered to create joint accounts.
“There are a few automatic payments that are set up through my account, so we need to be mindful of that and make sure there is enough money in the right account, at the right time,” Kay says.
Blending families and second marriages are another reason it may be prudent to have separate accounts.
“We had both married before, and both have managed our finances as head of the household and agreed that it made sense for us to continue with that,” says Leslie Tayne, founder and head attorney of the Tayne Law Group. “Since we are older, our finances are more complex, and keeping it separate just made sense for us.”
Tayne is a signer on her husband's accounts to give her access in the case of shared goals. The couple work together to cover mutual household expenses, but they individually take care of their children’s needs.
“It can seem unromantic or like you don’t trust your partner. … It can seem very much like it’s ‘mine vs. yours’ rather than ‘ours,’ ” Tayne admits, though she and her husband are careful not to use “mine” and “yours” language when referring to money.
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How to pick what’s right for you?
The merging process doesn’t need to happen right after signing your marriage license. It could make more sense to take your time.
“I’m a huge fan of couples merging their finances slowly, so they avoid any big changes and surprises and find the happy balance that works for them,” Shekar says.
It’s critical to acknowledge that what works in the first few months or years of marriage isn’t always going to be the right choice, especially as life changes.
“It’s going to be different for every couple,” Tayne says. “So the most important thing is that you’re willing to have those honest conversations, even though they can be difficult and sometimes uncomfortable.”
Erin Lowry is the author of "Broke Millennial Takes On Investing" and "Broke Millennial: Stop Scraping By and Get Your Financial Life Together."
The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.
This article originally appeared on USA TODAY: Personal finance: Joint bank accounts aren't right for all marriages