I have written before about merging finances and how to approach financial issues after you get married, but I wanted to revisit this topic as my wife and I recently went through this process. We were married in October of 2018 and I wanted to make sure we were both on the same page before we merged finances as that is vital to make this work for both partners.
With that being said, this will focus more on the conversations we had and the items we considered as we went through these conversations and less on the numbers side of things.
This is by no means intended as a blueprint or guide to these discussions, but I wanted to give you a look at how we handled these situations. Let’s begin with the most important facet of these conversations and where it all begins.
Communication
I know I’ve written a number of times about the value of communication with your partner, especially regarding financial issues, and here I am writing about it again. Without open and honest communication about something as emotionally connected as money, figuring out how to best merge finances is an uphill battle. This requires compromise on both parties as you go from thinking about “my money” to “our money” and how that changes the dynamic. This can be complicated by a number of factors but perhaps the most common is that one partner makes more than the other or one has more money saved than the other. Regardless of how good your relationship is, this can throw a wrench into these conversations. It can be tough for the person with less to accept this new influx of money that they (with a joint account) have access to, and it can be hard for the partner with more to accept someone else spending “their” money.
When we were discussing our joint account, this is something we had to work through as there were imbalances and I wanted to make sure both of us felt comfortable moving forward and were aware of where these feelings may come from. For us, what alleviated these feelings was buying into the idea of team. We were no longer single people making our way in this world, but we had decided to become a team and pooling resources is one of the greatest advantages that teams have. Many couples I’ve talked to have brought up or have hinted at this change as something that caused friction, so I hope that by showing how we approached it will provide some context. By buying into the “team” it allowed us to look at other issues with a new perspective, as it was not only my hurdle or her hurdle, but something we could get over together.
Goals
After intentionally working on open communication we were able to put our financial issues on the table and look at them from the new team perspective. This led to us being able to rank the goals we had and address issues intentionally. While it was scary to be financially vulnerable, this was incredibly helpful at pushing us to take action on financial to-do’s. Stepping back and taking a 30,000 foot view of our situation allowed us to prioritize where we wanted to spend our pooled resources in order to make the best life for both of us. Paying off high interest debt is a major priority, followed by working to get the best rates for my wife’s student loans. Once the student loans have been refinanced, it’s time to make sure we’re optimizing our retirement accounts and making sure we’re preparing for our future. Once we clear some of these hurdles, it will be time to sit down again and reassess where we are, where we need to go, and appreciate how far we have come. Be aware that some of the feelings of “but this is my money, why should I have it go towards your debt/retirement/whatever?” can resurface and should be discussed. Being financially vulnerable is not comfortable and the only way to make it easier is to consistently practice open communication.
Another important point when having these conversations is to understand the team dynamic, but to make sure you’re raising issues that are important to you and speaking up for yourself. While it can certainly be that one partner needs far more help than the other, being able to advocate for yourself is critical to equitable relationship. Perhaps paying off your partner’s high interest debt is the most important issue you both face, but that doesn’t mean you shouldn’t be concerned about your retirement accounts, or your debt, or whatever issues you may be dealing with. These conversations work best when it’s an equal give and take so that you and your partner become more than the sum of your parts. Money issues are a huge cause of relationship problems and while being financially vulnerable to your partner and having these conversations is certainly not easy, it is simple.
Opening a Joint Account
I’m adding this section because it’s something that we recently went through, so I thought I would share my experience for those going through this. We decided to move our separate bank accounts into a joint account to allow us to more effectively and efficiently pool our resources and track where our money is being spent. For this purpose, we opened a checking account with Ally Bank as they gave us all the options we wanted and seemed to be the easiest in terms of use (full disclosure, I don’t work for them and they aren’t sponsoring this post, nor am I getting any compensation from them, I’m just sharing what decisions we made). While opening the joint account went smoothly, it has been closing our old accounts that have been a pain. So, some things to remember when closing your old bank account. Make absolutely positively sure that you’ve changed all recurring auto payments. If there are any auto payments for your old account after you’ve closed the account, they will reopen the bank account and then charge you for not having any money. I’m glad this didn’t happen to me as this is not good financially and incredibly frustrating, so make sure you get this figured out and don’t let it happen to you. Make sure you tackle this process with plenty of time to get the funds from your old account to the new joint account as banks (and other financial institutions) have a tendency to slow down the transfer of money out of their control. With a little luck, the transfer will be smooth and hassle free!
I hope that this has been helpful for those going through this process and I cannot stress how much communication all of this requires. This generally will not be easy or comfortable, but the ability to pool resources and face challenges as a team instead of an individual is a great leg up on reaching your goals.
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