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Saturday, January 23, 2021

My wife and I decided to combine finances for 3 reasons, and it’s made everything in our relationship easier

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Personal Finance Insider writes...
  • After getting married, my wife and I decided to combine finances by opening shared checking and savings accounts.
  • This simplified things for us — it was easier to pay our bills and save towards common goals with shared accounts.
  • It also made it easier to earn big credit card bonuses because we were able to put big purchases on one card and know we’d share the expense.
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Getting married is one of the most unforgettable moments in your life. It’s also one of the most expensive.

Between buying a ring, hosting a wedding ceremony and reception, and paying for a honeymoon, it’s easy for costs to add up. And just when you thought all of the financial stress that comes with getting married is over, you’re faced with another big decision.

Should you combine your finances with your new spouse?

According to a Magnify Money poll of over 1,000 Americans, a majority of people (65%) reported merging finances after getting married. However, what was surprising to me was that nearly 1 in 5 people actually regretted the decision later on. For us, it’s been a great decision.

Personally, my wife and I decided to combine finances for three primary reasons. They might be good reasons for you to do the same, or raise some red flags on why you should potentially keep your accounts separate.

3 reasons we decided to combine finances

1. Simplicity

Combining accounts made it easier for us to manage our money.

Instead of having multiple bank accounts to pay our shared bills, fund our investment accounts, and save, we decided to combine our finances and open joint accounts. We primarily use a Chase checking account as the “central hub” of our finances for our paycheck deposits. From there, we pay our credit cards and other bills, as well as transfer money to an interest-bearing savings account and other investment accounts.

We don’t have to divvy up expenses between us since all of our money is going into one shared account.

It helped that I’m a personal finance geek and my wife has a typical level of interest in finances and money — she was happy to offload the banking, budgeting, and investing tasks to me, and I was happy to manage everything for us.

2. Better visibility

Combining our finances also gave us a better idea of our overall financial story.

A lot of people use Personal Capital or Mint to track their finances, and while I prefer to use an Excel spreadsheet to monitor and track where we stand, it largely accomplishes the same thing. By combining our finances, it’s easier to see everything that is going on and make sure nothing slips through the cracks.

Instead of having two people keeping an eye on two separate sets of finances, we get to have two sets of eyes on one set of numbers. 

Sharing accounts also provides visibility in other, less obvious ways. Like in the case of credit cards.

A few years ago, we were both opening premium credit cards to take advantage of sign-up bonuses and the perks they provide. We were able to stagger when we opened the cards to ensure we could hit the sign-up bonus spending requirements, and also opened cards that provided better perks in different areas of spending.

For example, I opened the Chase Sapphire Reserve Card, so I put all the travel and restaurant expenses on my card without having to worry about overpaying my “fair share” since all of our credit cards are paid from the same pool of money.

Plus, since these premium cards often require you to spend a lot of money in a short period of time to earn the rewards (for example, $3,000 in three months), it was easier for us to put all our spending on my card for a short time period without having to worry about “squaring up” afterwards.

3. Motivates us towards our common goals

The last, and arguably the most important, reason we manage our money this way is that combining finances allows us to work towards common goals.

The biggest and most important goal for us is retirement. While right now we are still largely taking the same actions, like investing in a 401(k), Roth IRA, and brokerage account, it’s easy to foresee a future where we might take different approaches to better work towards common goals.

For example, if one of us had a superior 401(k) account, it would be easy to invest more than we normally would on our own in that account while the other person handles more of the everyday expenses. You can play off of each other’s strengths.

Retirement isn’t the only shared goal for us, though.

We’re saving to buy a home, and we’re both working towards that goal together. Same goes for in the past when we saved for vacation or even just a couch. Having a common goal helped us to prioritize saving and keep each other accountable.

Combining finances is not for everyone

There is no one-size-fits-all approach when it comes to marriage or personal finances. So, not surprisingly, there isn’t one answer to the question of whether you should combine finances after marriage either.

If you and your partner have different money goals, different spending habits, or just prefer to manage your money on your own, then you should. For a lot of people, keeping part or all of your finances separate can make sense.

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