Marriage finances

[ludawg23]

Getting married at the end of April of this year!

Just wanted to get a sense of what the married couples are doing in terms of joint finances.

We both have very stable, good paying salaries in New York City (live in Queens as it's much cheaper and a bigger space). We're able to live comfortably and do our favorite thing...travel!.

Thankfully, we've paid off this wedding in cash (destination wedding). Anything we get from the wedding cash wise (not that we're expecting many to give us a gift since it's destination) will be put in our joint savings account.

Fiancee has a small amount of CC debt while I have outstanding college loans from a 5 year university. My game plan so far was putting cash into this wedding so I've only been paying the minimum. After the wedding, I can agressively put money towards this and any future bonuses.

Our plan:

1) Put X amount towards savings each month as emergency
2) Start a joint checking account for joint expenses (grocery, utilities, bills, food etc.)

We don't have a car as we live in Manhattan and do not plan to buy a house/condo any time soon as we're trying to figure out what we want to do in the next 4-5 years.

Any advice would be greatly appreciated.

Thanks!

[disneysteve]

Congratulations on the upcoming marriage.

Here's my opinion, and I totally understand that others strongly disagree but since you asked....

I am a firm believer that if you love and trust someone enough to get married, you should love and trust them enough to combine your finances. If not, you should reconsider the relationship. I wouldn't have married someone who I felt I couldn't trust with money.

Money problems are a leading cause of divorce so if the two of you can't work together in this area, the chances of things working out overall are diminished.

My wife and I opened a joint account after we got engaged and combined everything after we got married. The only thing not joint is our retirement accounts, of course, and we each have one credit card (Discover) that is only in one name, but it still gets paid out of our joint checking account. Neither of us has any type of account or financial arrangement that is totally separate. All of the money goes into one pot and all bills and obligations are paid from there.

[fe2o3ez]

I am a firm believer that if you love and trust someone enough to get married, you should love and trust them enough to combine your finances. If not, you should reconsider the relationship. I wouldn't have married someone who I felt I couldn't trust with money.

Money problems are a leading cause of divorce so if the two of you can't work together in this area, the chances of things working out overall are diminished.

Yes, first of all, Congrats!

I agree with Steve - mostly.

Here's my take. I love and trust my wife implicitly, but having grown up in a family that was tight with its financial position, I know how bad the money arguements can be. Therefore, when we got married (actually, when we were engaged, as with Steve) I created a joint checking and joint savings, but retained our separate checking accounts (with only basic features). Since we are both employed, we would each contribute XX amount to the 'house' (joint) checking, and YY amount to the Savings. The amounts were prorated, since we made different amounts of money, but at the end of the day we each had a few hundred bucks left over, which goes into our 'personal' checking.

Understand why we do this:
1. She likes to get an occasional facial or pedicure, and I will go to a hockey game.
2. I like to play golf, she likes to go shopping.
3. We each like to buy gifts for each other without the other knowing how much was spent. Sometimes it is better that way.

Essentially, there are times when you may not agree on how money is spent, especially for personal preferences or hobbies. AFTER household bills, savings, and retirement issues are taken care of, then we each can spend our personal money as we see fit.

That way I dont have to feel guilty for playing a round of golf, 'cause I am worried that the water bill hasn't been paid!

(a couple years later, I read one of David Bach's books and realized he had proposed essentially the same system)

[fe2o3ez]

Fiancee has a small amount of CC debt while I have outstanding college loans from a 5 year university. My game plan so far was putting cash into this wedding so I've only been paying the minimum. After the wedding, I can agressively put money towards this and any future bonuses.

Oh, and as far as her CC debt goes, you will win big points if you help her pay it off. I state that a bit 'tongue-in-cheek', but the truth is, there is a big benefit to getting to a clean slate together, where you have no debt as a family and can start your married life from a financially sound position!

[disneysteve]

Oh, and as far as her CC debt goes, you will win big points if you help her pay it off. I state that a bit 'tongue-in-cheek', but the truth is, there is a big benefit to getting to a clean slate together, where you have no debt as a family and can start your married life from a financially sound position!

Once you are married, there is no more "her" debt and "his" debt. It all becomes "your" debt and you need to work together to pay it off whether it is her credit cards or your student loans or her car loan or your medical bills.

[thekid]

We're different.

We have a joint CC for all common purchases (we split the payment each month) and split payment of all other joint expenses that can't be charged to a CC. This is the vast majority of our expenses.

Other than our joint CC, we don't have any other accounts in common.

The odd thing is that we get along perfectly money wise. We are both prudent, have no debt, have about the same spending habits and coordinate well together.

It's not about mistrust of the person. It's more about knowing that there is a possibility of a seperation (statistically, a high one), even if our relationship is strong. We've been together for over 10 years, have a child and generally have a very strong relationship.

We both work, have good incomes and pool what is common. At the same time, we are both financially independent so each keeps what doesn't need to be pooled. We started out this way as we started living together before we got married and this seemed like the logical way of going about it. We didn't feel the need to change after we got married. We've been doing it for so long, that it just seems "natural" to us.

[ludawg23]

Thanks for the replies everyone. I would have to assume that it'll take a few months of trial and error to get the perfect system.

We have the same spending habits and both have good money management skills in general so I'm not worried. I think a small joint account for joint expenses would work for us and see how it goes. I'm definitely all in on the joint savings account though...need to keep a decent cushion for a rainy day and start saving for a house somewhere down the line.

I would personally feel bad if she were to take on my student loans as well. I would never force that upon her and would only welcome it if she brought it up. My 2 cents regarding that...

[Slug]

Start fresh for both of you by paying off the CC debt immediately. The student loan debt now belongs to both of you. Depending on the rate, you both may or may not choose to pay it down at an accelerated pace.

For my wife and I, we started off making around the same amt. and just dumped it all into 1 account and paid for everything that way. As time wore on we became more sophisticated, pragmatic, and argumentative around certain spending. A decade later now, I will make about 14x DW this year. We will continue to dump everything into 1 account, but 2 things are different.

The first is we pay for a housekeeper once a month out of the joint account which negates 50% of arguments and nagging which has little to do with PF but a lot to do with marital harmony AND second we each receive $250/mth into our play accounts to spend as we please. If we don't spend it, it stays in that play account so one can save for bigger ticket items. These play accounts cover all personal non-essentials like sports equipment, dining out, haircuts, massages, etc... This eliminates another 25% of arguments because each is given an equivalent amt. to spend as you like. The dollar amt. should be based on what's reasonable for your own PF situation.

You also said you like to travel. We also set up a separate travel account that can ostensibly only be used for family vacations. In our case we set this up because we are horrible about never going on vacation. I think it gets $150/mth.

I think this is most commonly referred to as the envelope method. It works very well for us. All the monthly transfers are automated. Then when we buy something we just transfer that much out of the account to cover the expense.

[jpg7n16]

I would personally feel bad if she were to take on my student loans as well. I would never force that upon her and would only welcome it if she brought it up. My 2 cents regarding that...

What impact does your current payment have on your cashflow? On your ability to do things as a family?
How would you guys benefit from the extra cash each month?
Could you save more for retirement if the SLs weren't hanging around? Save up for a vacation easier? Buy better birthday/Christmas gifts? (insert whatever it is that you guys want to do that takes money to do)
Wouldn't she benefit from that?

It's not that you're dumping your loans on her - you're getting married and forming a team. The two of you can now tackle your financial problems together, and will both benefit from it.


My point is, if it benefits you to pay off your SLs, then it benefits her as well. If it benefits her to pay off CC debt, then it benefits you as well. You're in this together.

-------------------------------------------

I'm much more aligned with DS on this one - have the bulk of the money in the joint accounts. If you want to budget 'his' and 'hers' money each month, and want a separate account to let that build up, I guess that's okay.

But aren't you joining lives together? Aren't finances part of each of your lives?

[phantom]

I would personally feel bad if she were to take on my student loans as well. I would never force that upon her and would only welcome it if she brought it up. My 2 cents regarding that...

I personally think it makes sense think of them as debt that belongs to both of you from the moment you get married. As long as you have those debts, your payments on them will take away from your ability to contribute to the overall household finances, so whether you like it or not their existence impacts both of you. Her credit card debt is the same way. So, I think it makes sense to deal with all the debts as belonging to both of you together, and decide on a unified plan for dealing with it.

[Mr Tipps]

I think you are going to get a lot of varied advise on this subject. From a personal point of view, in my household everything is common. All the debt and all our assets belong to both of us (regardless as to who's name is on the title). Therefore we have joint credit cards, bank accounts, etc. Both of us are disciplined in our spending and neither of us have to ask for permission to buy anything, as we trust the other person isn't wasting money for no reason. Obviously we discuss large purchases, as these purchases affect our household.
My advise would be to pay off the credit card if you have the money. However, I know a lot of couples who still have separate bank accounts and they are very happy - so do whatever makes you guys happy!

GOOD LUCK AND CONGRATULATIONS for your wedding!

[LivingAlmostLarge]

Everything was joint from the start. But we were broke and every penny counted. We needed to pool our money because we made so little living in a HCOLA no way could we have done it. We lived paycheck to paycheck 12 years ago.

So we've never changed it though our earnings have increased enough that we could.

[bjl584]

You are entering into a legal partnership. All money and debt becomes both of yours. You will both come out further ahead in the long run if you work together on finances.

[BuckyBadger]

Everything is joint. Both of our paychecks go into one checking account and then are distributed into various accounts and pay various bills. We'll spend about $300 before we feel the need to talk to each other about it.

I spend more of "our" money than he does, but the things he likes to do are usually inexpensive, and the things I like to do are not. Because we are a team and everything is together, it doesn't matter. If he ever wanted to do something pricey, I would cut my spending if necessary. I make more money that he does now, but even when I made less than he, I still spent more of it!

[thekid]

You are entering into a legal partnership.

Not sure about the US, but in Canada pre-marriage assets and liabilities do not become joined by marriage. Post-marriage assets and liabilities can be joined or seperate, depending on arrangement.