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Steps for merging money after marriage

Kelly Kowalski, Cliff Noreen, and Bronwyn Shinnick

Posted on February 15, 2018

Our executives and experts team up to write educational articles, covering a variety of financial topics such as life planning, college savings, and retirement.
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Money may make it easier to pay the bills, but it can also be a significant source of tension in the marital home – especially for newlyweds.

Couples who fail to merge their money effectively in the early years of their marriage may be doomed to disagree about their finances down the road.

An online survey by The Harris Poll for Ally Bank found money was the single greatest source of stress for most couples.

“Marriage is a joyous event, but like any important milestone in life, planning is the key to success, especially when it comes to personal finances,” said Diane Morais, president of consumer and commercial banking products for Ally Bank, in a statement. “Open communication between the partners about how to spend and save money together can help establish a solid financial footing.”

Arguments often arise when spouses have different saving and spending philosophies, keep secrets about their personal debt, or fail to discuss their financial goals.

“Communication is very important in any relationship,” said Larry Rosenthal, president of Rosenthal Wealth Management Group in Manassas, Virginia, noting money management should be an ongoing discussion. “As couples move through life, their goals will change.”

So how should newlyweds go about marrying their finances if they hope to avoid trouble in paradise? Areas to address include:

Here’s a closer look at each of those areas.

Share your money story

The first step is to have an open, honest talk about your finances, said Rosenthal in an interview.

“Put it all on the table,” said Rosenthal.

Share your credit card bills, student loans, income, expenses, monthly cash flow — even your credit scores, which will impact the rate you and your partner may get on future loans for homes and cars. (Learn more: Newlyweds and insurance)

But it is also important to discuss your spending philosophy.

Are you debt averse? Do you wish to live below your means for the first five years to sock money away for a down payment on a new house? Or, do you feel your income is meant to be enjoyed on clothes, cars, and vacations?

“Talk about your thoughts on money,” said Rosenthal. “You may have different money values than your spouse.”

The more you know about your partner’s objectives, goals, and financial position, the less likely you are to be surprised.

And the “money talk” can also help you coordinate on marriage goals that should involve some financial planning. For instance, do you want to have children? What will that do your household’s immediate finances and what will it mean for longer term issues, like saving for college.

How about buying a house? Do you and your spouse have a savings plan in place for that? Or charities. Is that a priority? And should something happen to one of you, will you need life insurance in place to help protect the survivor? (Related: Ultimate life insurance guide)

To merge or not to merge your finances?

Next, you will need to discuss how, and if, your money will be merged.

There is no right answer here. Some couples successfully blend all their bank accounts and finances, while others opt to keep their money separate, and contribute equally towards joint expenses, such as mortgages and utility bills.

A hybrid approach that works for many couples, sometimes referred to as the “You, Me, We” system, is to create three separate accounts — one for each spouse and one for joint expenses. That gives couples the freedom to spend their discretionary income as they choose.

“I am a big believer in each spouse having an allotment of cash money that they can spend on baseball cards or designer jeans or whatever they want and the other spouse can’t say a thing about it,” said Rosenthal, noting that solves the problem of one spouse micromanaging the cash flow. “I think that’s where a lot of fighting starts, when we don’t respect the other person’s freedom to spend their mad money.”

That said, he notes, discretionary spending must still remain within budget, so as not to drive the household into debt.

Who will pay the bills?

Next, decide which spouse will take responsibility for paying the bills.

To be clear, both spouses should have a manageable grasp on how much money is coming in and going out, but to ensure your debts get paid on time, which avoids unnecessary late fees and a ding to your credit score, one spouse still needs to take point.

Generally, that is the person who is best at managing due dates and monitoring changes to the monthly bills. But it can also simply be the person who has the time and inclination, said Rosenthal.

It is possible to share bill paying responsibilities, too, of course. Just as long as you decide together on a system that works.

Plan for retirement

Marriage may be the ultimate proof that opposites attract, but this sentiment does not carry over into retirement planning.

A long and happy marriage means both partners should prepare for life as retirees, where things like health care costs can quickly drain disposable income.

According to Fidelity Benefits Consulting Services, the average married couple, both age 65 and retiring in 2022, could expect to spend an estimated $315,000 on health care throughout retirement. That figure assumes enrollment in Medicare health coverage, but does not include the added expenses of nursing home or long-term care.2

Rosenthal said newlyweds should also share their tolerance for investment risk. Are you age-appropriately invested for growth? Do you err on the conservative side? Are you willing to risk higher potential rewards for higher risk investments? (Learn more: Retirement and your spouse)

Squirrel away an emergency fund

Apart from a retirement portfolio, couples should agree upon a percentage of their income to place into an emergency fund, a reserve devoted to unplanned financial disasters such as sudden job loss, a house fire or a trip to the hospital. (Learn more: Emergency fund basics)

To play it safe, financial professionals recommend couples sock away between six to 12 months’ worth of living expenses in a liquid, interest bearing account – more if your job security is in question or you are self-employed.

Look forward to your joint tax return

For newlyweds who file a joint tax return, a change of marital status may allow them to keep more of their hard earned money.

Why? Many couples who file together can typically deduct two exemption amounts from their income and they may qualify for multiple tax credits such as the Earned Income Tax Credit, American Opportunity and Lifetime Learning Education Tax Credits, exclusion or credit for adoption expenses and Child and Dependent Care Tax Credit. (Related: 8 tax breaks for married couples)

Some joint filers also receive higher income thresholds for certain taxes and deductions, meaning they can earn more income and still qualify for tax breaks.3 Of course, taxes vary according to individual incomes and circumstances.

Love may be all you need, but when it comes to starting life together as a married couple, a little money helps too.

With careful planning and open communication, couples can help ensure they reach their financial goals – and keep their happy home.

Discover more from MassMutual…

Marriage and Finances: A To-Do List

$245K to Raise a Kid?! Finance Tips for New Parents

Need financial advice? Contact us

This article was originally published in October 2016. It has been updated.


1 American Psychological Association, American Psychological Association Survey Shows Money Stress Weighing on Americans’ Health Nationwide,2015

2 Fidelity Benefits Consulting Services, Retirement Health Care Cost Estimate, 2022.

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