Marriage and money: merging your finances successfully in married life

The first big money question in every romantic relationship starts from the moment you meet: who picks up the tab on the first date? As your relationship progresses, the financial questions (and responsibilities) become more complex.

Pretty soon, you have a wedding to pay for. Then a home, a family, children’s education, insurance, investments, and eventually a joint retirement. If you’re wondering how to go about merging your finances after marriage, this article will help.

Start with being honest about your financial situation

While merging your money post-marriage can feel like an overwhelming conversation topic, it doesn’t have to be. Like most financial matters, it starts with a financial plan.

Have an open discussion and be upfront about your earnings, investments, debt, and financial situation. Discuss your values and what you want to spend your money on. Your financial goals don’t have to align completely with your partner’s – encouraging one another to follow individual financial goals can be a healthy part of your marriage.

Find an approach that suits you both

Once you’ve had the conversation and are both on the same page, you can move into the specifics of who pays for what and where you’ll keep your money. There’s no one-size-fits-all approach, so here are a few common methods you can consider:

1. You share everything. You combine all your money with your partner and share all accounts and investments. If you do choose to combine all your finances, a gradual approach often works best. Start with one joint account to meet everyday household expenses and try it for a few months, then move forward with sharing the rest of your assets.

    

2. You share joint costs. You keep some of your finances separate, but you contribute equally to joint financial goals, such as your mortgage, everyday household expenses, holidays, and date nights.

    

3. You live off one salary. One person pays for all the expenses in the relationship. This can be popular for couples where one person earns a substantially higher income or is the sole full-time worker.

    

4. You contribute the same percentage of your income. For example, you both allocate 50% of your income to joint expenses and keep the rest in your individual account. This can be a great way of keeping contributions relatively equal, even if one partner earns significantly more than the other.

    

5. You take it in turns. You take turns paying the bills, or you allocate specific financial responsibility to each person. For example, one of you pays for the groceries, and the other pays the energy bills. This can work well for couples who want to share financial responsibilities but aren’t ‘all in’ on joint accounts.

Discussing these approaches is a great starting point, but the most important thing is to find an approach that works best for your relationship.

Should you keep an individual account?

There’s no right or wrong answer here. However, we typically recommend having at least one bank account you can call your own. 

An individual account not only gives you the ability to pursue personal financial goals, but it can also help if your marriage or relationship ends. According to the Australian Bureau of Statistics, an estimated 16% of women and 7.8% of men have experienced economic abuse at the hands of their partner. Individual accounts are like safety nets that provide you both with peace of mind.

What about prenuptial agreements?

A prenuptial agreement is often viewed with scepticism or seen as a lack of trust, but in reality, it’s a practical tool that can provide clarity and protection for both partners. Essentially, a prenuptial agreement (or “prenup”) is a legally binding document created before marriage that outlines the division of assets and financial responsibilities in the event of a divorce.

Creating a prenup doesn’t mean you expect your marriage to fail; rather, it’s about making informed, rational decisions during a time of mutual love and respect. This agreement can cover a wide range of financial aspects, including the division of property, superannuation, spousal support, and the handling of individual debts.

Tips for navigating financial challenges as a couple

Financial stress is one of the top reasons for arguments, break-ups, and divorce, so being clear about money is a pillar of a healthy partnership. Here are some practical tips to help you and your partner manage financial stress together:

• Communicate regularly. Keep an open dialogue about money. Schedule regular financial check-ins to discuss your budget, expenses, and financial goals as a couple – whether that’s saving up for a holiday, paying off your mortgage, or planning for retirement.

   

• Create a budget together. Create a budget that reflects both incomes, expenses, and savings goals. A joint budget can help you track your spending and ensure you have sufficient cash flow while living within your means.

   

• Plan for emergencies.  Building an emergency fund with 3-6 months’ worth of living expenses can provide a financial cushion and peace of mind. You should also update your insurance policies to reflect your current situation once you’ve tied the knot.

   

• Discuss major purchases. If you share a bank account, you can both legally take out the money and spend it on whatever you want. However, using joint money to pay for your own costs without agreement can lead to division and resentment. Discuss them with your partner so there are no nasty surprises.

   

• Support each other’s financial independence. If you do decide to keep individual financial accounts, encourage each other to use them to pursue personal goals. This fosters a sense of independence and security, which can help support a strong marriage.

   

• Seek professional advice. If you’re facing complex financial challenges, consider seeking advice from a financial advisor. A professional can provide unbiased guidance and help you develop a comprehensive plan to address your financial concerns.

Speak to Poole Advisory about your joint financial plan

Want professional help to figure out the right way to combine your finances? At Poole Advisory, we understand that every couple’s financial situation is unique. Our team of experienced financial planners can provide personalised advice tailored to your specific needs and goals.

We can help you:

• Facilitate financial discussions.
• Develop a comprehensive plan for merging your finances.
• Create a joint budget that works for both partners.
• Set and achieve shared financial goals, such as buying a home or planning for retirement.
• Manage debt and build an emergency fund.
• Protect your assets with appropriate insurance.

   

If you’d like to explore how we can help you build a solid financial foundation for your marriage, get in touch today using our contact page or by booking a free introductory appointment.

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This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns

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