Getting Married - Merging Your Money and Your Households

     One of the greatest challenges that you and your spouse will have to face when you get married is figuring out how to merge finances. Careful communication and planning are of the utmost importance; financial decisions that you make now can have a great and permanent impact on your future together. This is especially true if you are going to qualify for a mortgage to buy a home, or refinance a home loan for a home that one of you already own.

     The first step in figuring out your shared finances is to discuss goals. Make a list of short-term goals (e.g., paying off wedding debt and the honeymoon) and long-term goals (e.g., planning for kids and retirement). Determine which of those goals are most important, and then focus your energy on achieving them. Put together a budget that lists all income and expenses. It is smart to designate one spouse to manage the budget -- or you can take turns on an annual basis. If you are both going to be involved, develop a system of record-keeping that both of you understand. One important goal to homeownership to consider is paying off debt, and paying if off on time and perhaps even ahead of time.

     At some point, you will have to decide whether to combine your bank accounts or keep them separate. A joint account does have its advantages (easier record keeping, lower maintenance fees, etc.). However, sometimes it can be much more difficult to keep track of your money when it is in a joint account that two individuals can access and can spend from. You can get around this problem by making sure that you when a check is written or a withdrawal is made that each of get notified. Another system could be that for any purchases over $100, you must consult with the other spouse before you can purchase the item or spend the money. Of course, you could just decide to maintain separate accounts. It could be easier, but not entirely romantic.

     With credit cards, it is actually somewhat risky to add your name to your spouse's account. With joint credit card accounts, both of you are responsible for every bit of the credit card debt. There is no benefit to putting someone on your credit if you have bad credit. But, if one of you has poor credit, while the other’s credit rating is good, putting the poor credit spouse on some of the good credit spouse can ultimately improve the credit scores of the weaker credit spouse.