Marriage is a huge commitment and investment, and because of its importance, both parties must discuss their priorities before officially tying the knot.
One of such priorities is whether you should merge your finances. If you and your partner have discussed the weight of this option but have yet to reach a decision, here are the pros and cons of merging finances after marriage.
Marriage and Money:
Before discussing the pros and cons of joining bank accounts after marriage, let’s discuss the relationship between money and marriage.
According to the Innovative Psychological Consultants website, the three most common issues married couples fight are sex, money, and children.
In the financial aspect, couples argue about various topics, some of which involve the following:
- What to spend money on;
- How much to save
- What the couple is saving for
- Spending for what you want vs. what you need
- Whether to merge your accounts or keep them separate
- How the bills should be divided and paid for
- How to budget for the home and the things included in said budget
On the same site, it’s also been reported that couples tend to fight more about money under these circumstances:
- When they are running short;
- When they are on the verge of going into debt;
- They are currently finding ways to get out of debt and
- Who is responsible for said debts
As much as we would like to say that money isn’t a significant factor in love and relationships, it does play a tremendous role when planning. So, if you want to start a family, experts advise couples to at least start discussing their financial goals before they exchange vows.
What are the pros of merging finances after marriage?
Combining finances may seem old-fashioned for many, but several financial experts have outlined some benefits couples can expect. Some of these advantages include the following:
1. It offers shared financial goals and responsibilities.
Many couples start from the ground up regarding their financial journey after marriage. Opening a joint account can be a great way to enable both parties to evaluate their financial goals and responsibilities while keeping each other accountable.
2. It offers more accessible access to money for both partners.
There are fewer hurdles when withdrawing or transferring money from a joint bank account. Married couples without shared accounts may need to prove their relationship to the institution by presenting a marriage license, etc. This extra step can be time-consuming, especially if they need money immediately.
3. It offers transparency for budgeting.
Opening a shared account lets you into your partner’s spending and saving habits. This feature enables both parties to keep close track of their finances while encouraging each other to make better financial decisions.
4. It provides a sense of security in the relationship.
Many couples opt to open a joint savings account because it offers a sense of security in the relationship. Suppose one person makes more money than the other. That doesn’t necessarily mean that the person making less isn’t contributing to the relationship. Nevertheless, having a shared joint account can provide a safety net for those needing help to make ends meet.
What are the cons of merging finances after marriage?
While merging finances through opening joint accounts offers many advantages to the couples, it can also have some setbacks that can affect the relationship. Here are some issues that could stem from joining accounts.
1. It requires compromise.
Many couples open a joint account for multiple reasons. Some include paying bills, setting up a retirement fund, or saving for their children’s future. Whatever the goal, couples will have to put aside what they want so they can prioritize what they need. This step can be frustrating for people who are used to a particular lifestyle.
2. It can be difficult to divide assets after divorce.
Divorce is a stressful event. Couples with only joint accounts will have to go through the motions as the court divides the money and properties shared between the couple during the marriage. This process can be lengthy and add more financial strain to both parties.
3. It can lead to relationship issues.
Having a joint account opens you to your partner’s saving and spending habits and vice versa. Couples who prioritize saving over spending may find it frustrating when their partner spends more than they make. On the other hand, one partner may feel restricted and resent their spouse for being too tight-fisted.
4. It can lead to financial issues.
Couples who don’t work through their financial goals together may find that sharing accounts can be more costly in the long run. If one partner cannot save or contribute to the household, this could lead to financial issues, affecting their future and financial standing.
What are Your Options for Managing Money After Marriage?
There are three options that couples may consider when it comes to financial management after marriage: merge it, keep it separate, or use a mixture of both. Each has its pros and cons, which should be carefully considered.
One option is not necessarily better than the other. Depending on the couple and their priorities, they can reach their financial goals by communicating with their partners regularly and keeping their expectations realistic.
Nevertheless, there is a middle ground if you’re unsure between keeping your accounts separate or merging them. The latter of which is to do a mix of both. For this option, couples can keep individual accounts for personal use while opening a joint account. The latter can be used to pay bills or as a retirement fund. While it also has its setbacks, having a mix of both helps distribute your finances more efficiently while providing freedom.
To find your best option, contact a financial adviser and choose a bank with the best interest rates. Good luck!
Takeaway: Marriage is a commitment and investment requiring care and effort. Usually, couples wonder if they should open a joint account to achieve their financial goals. While old-fashioned, opening a shared account offers multiple benefits that can help both parties. However, some of its setbacks can strain the couple’s relationship.
Whether you open a shared account or not, you must talk to your partner and ensure you’re on the same page before taking the plunge. Good luck!