Merging Finances in Marriage: 3 Pillars of Success

If you surf the internet on should you merge finances or best ways to merge finances, you will get plenty of unique tips, tricks, and plans.  Like most things in life, there is no one perfect way to manage your finances in marriage. In this blog, I am going to discuss three guidelines for success in merging finances. I am focusing on merged finances because it is not realistic for most couples to keep finances completely separate and I believe when done well, merging finances can be healthy for a marriage. 

Practice Transparency – 

While this may prove to be challenging, transparency at the onset and throughout the relationship is pivotal for couples merging finance. Having an open and transparent conversation about money and finances is a great jumping off point. Talk about your history with money, how your parents handled finances, what you value that costs money, what scares you about money, what you would do with more money, etc. Take some high-level notes on the conversation, as those can be helpful for future planning. 

Laying everything out on the table is important in the initial stages of merging finances.  Putting together a joint balance sheet is a good start. By this I mean listing all financial accounts, assets, debts, loans, credit cards, etc. on a piece of paper. Many couples dread this because there can be pent up feelings of embarrassment and guilt due to how one has handled their previous finances. But ignoring these financial items can be the worst thing to do. Having this balance sheet also gives your family a quantifiable starting point and something you can build on. 

Continuing to be transparent through your financial journey will ensure you are on track. The biggest actionable item here is to track your spending and have a budgeting system that works for you. If the term budget is intimidating to you, I suggest calling it something else because it is imperative that you have transparency about spending. If you are not aware of your spending habits, then it will be difficult to fix any potential problems, save appropriately, and plan for your future. There is no shortage of budgeting tools out there and here are the top picks for 2021. 

Show Respect –  

Without mutual respect, merging finances will be challenging and tiresome. We all have  different wants and needs. Working together as a team and learning and respecting your  commonalities and differences can strengthen the process. 

One common source of conflict in relationships is differences in spending habits. Economically speaking, the price of a good is determined by the market for that good. Realistically speaking, that price will not always align with how you value that product (or service). Moreover, how you value that product may not align with how your spouse values that product. Said another way, my wife may scratch her head about how a pack of golf balls can cost $50, and I can do the same for how a pillow can cost $50. We each place a different value on products and services. What is important is that you control the degree to which you spend in these areas where you are not in  financial agreement. In the previous example, I might concede to playing with cheaper golf balls (or not hit as many in the woods) and my wife might scale down her taste in pillows (or not have six pillows on the couch). I joke about this but I also recognize that you may not always be in  perfect harmony in the value you place on various purchases, but you can be respectful of those differences. 

Get Organized –  

Organization is mission critical for managing personal finances and this is even more true when  you add a spouse and kids into the mix. When organized you are more apt to be disciplined and  make sound decisions. Here are some things you can do to get organized: 

• Have a safe, centralized place where account information and passwords are stored.  It is important that this is updated regularly and that both spouses know where to find it in case of emergency. It can be as simple as an excel file that is password protected.
• Create and keep an updated estate plan.  Take time to make sure that your estate plan and account beneficiaries are updated to reflect your current wishes.
• Lay out roles and responsibilities.  It is important to lay out roles and responsibilities upfront, so nothing is missed.  How are bills going to be paid? Who is going to organize and track the spending? Who is going to handle savings and movement of money to investment accounts?
• Have regular and scheduled communication. Even if one spouse handles all the finances, it is still important to have on-going meetings about your merged finances. These meetings can help empower the spouse less involved and start the conversation if there are any financial issues.  
• If you need help, seek it.  Many times, you will run into financial issues that are beyond your understanding and capabilities. The best thing for you and your spouse to do at times like this is to seek help. Basic finances in many cases lead to more complex financial planning questions and an expert can help simplify the process. Here are some keys to success when hiring a financial professional. 

There is no perfect plan or system for a married couple to manage their finances. Instead, it is important to find out what works for you. It may be a process that needs to be refined over time, but if you practice transparency, show respect, and get organized you will be well on your way to financial harmony.