HOW to combine finances

[ginjaninja]

Hi MMM Community,

I am not asking for opinions on sharing finances vs not with your spouse.  I am asking if you have gone from doing everything yourself into shared finances, how was that transition for you?

My Fiance and I are currently keeping everything separated until we get married in September.  We have had at length discussions on how we want to manage money going forward (saving and investing strategy, spending habits, joint accounts with limited spending money, future goals, etc.).  I just do not know how we make the transition from the way we currently are doing things into our future goals.

Do we open new bank accounts that are joint?  Do we just transfer everything into one of our bank accounts and add an authorized user?  Does he start sending money to my financial planner?  Do we still have separate Roth and 401K accounts?  Do we combine all accounts on Mint?

Is it easier if one person handles most of the money stuff and then shares information with their partner monthly?  Does it work better to have both parties go over the monthly spending together at the end of every month?

Finally, if you have gone though this transition what was the most challenging aspect?  Is there anything you would have done differently?

Thanks,
Ginja

[LifeHappens]

I got married at 35 and my DH was divorced, so our financial situation was fairly complex, but it was pretty easy to combine finances. You're probably overthinking this :)

Do we open new bank accounts that are joint?  Do we just transfer everything into one of our bank accounts and add an authorized user?

I suggest opening new joint accounts. You can keep your old accounts as well if you plan to have some money separate, but it is easier to start with a clean account in my opinion. Plus you can pick a bank that will give you a new account bonus. 

Does he start sending money to my financial planner?  Do we still have separate Roth and 401K accounts?  Do we combine all accounts on Mint?

You will still have your own Roth and 401Ks. Those are individual accounts with individual limits. For example, on the Roth, you will both still have a $6000 limit on contributions. That doesn't change upon marriage unless your combined income bumps you over the contribution threshold. There is no reason you HAVE to use the same investment institution. You can definitely add all your accounts to Mint and share the login if you are both inclined to check it.

Is it easier if one person handles most of the money stuff and then shares information with their partner monthly?  Does it work better to have both parties go over the monthly spending together at the end of every month?

This is a big, "it depends" situation. In most relationships, one person is going to be more into the financial tracking. Guessing in your relationship it's you, since you're on this site! You need to talk this one over with you SO and see how you want to handle things as a couple.

Finally, if you have gone though this transition what was the most challenging aspect?  Is there anything you would have done differently?

For me, the absolute in explosion in complexity in combining our finances caught me off guard. We bought a house at the same time we combined finances. I had never been a homeowner and was just not prepared for all the startup spending and the sheer number of bills that creates. I was kind of slow to start tracking in detail and felt really out of control of our financial situation for the first couple years of our marriage. In retrospect, I wish I had kept to my habit of tracking every purchase and reviewing it every month. There was no Mint or other tracking site then, so it should be easier for you to avoid my mistake.

Best wishes for your marriage, and I hope this helps a little.

[Raenia]

My husband and I have combined finances, but we kept all our individual accounts from pre-marriage.  We opened a combined bank account, into which we both deposit money, and a joint credit card to pay household expenses. Rough breakdown:

 - Joint Checking, Joint Credit Card - All regular household spending
 - My Checking/Savings, My Credit Cards - My direct deposit goes here, then a monthly transfer to joint.  My cards are rarely used, only for gifts or personal spending.
 - My 401k, HSA tIRA, Roth IRA, Brokerage Account - Ongoing contributions out of my checking/savings
 - His Checking/Savings/Credit Cards - Same as mine
 - His 403b, HSA, Roth IRA, Brokerage Account - Same as mine

We do all financial planning as a unit, and work out how much each of us should be sending to the joint account monthly in order to meet our goals.  We do not send equal amounts, or even proportional, but what is needed based on savings targets.  We have a flowchart showing where money should be flowing each month.  I.E. $500 from my account to my IRA, $2000 from my account to joint account, $500 from his account to his IRA, $500 from his account to joint account, $1000 from his account to his brokerage (numbers made up).

Do we open new bank accounts that are joint?  Do we just transfer everything into one of our bank accounts and add an authorized user?  Does he start sending money to my financial planner?  Do we still have separate Roth and 401K accounts?  Do we combine all accounts on Mint?

We found it is useful to have a joint account, but using an account you already have and adding the other as an authorized user also works fine.  IRA and 401k are individual accounts, and cannot be combined, but you'll want to update the beneficiaries with your spouse.  If you continue to use the financial planner, you should go to him/her together, to have a full picture of your combined financial situation.

Is it easier if one person handles most of the money stuff and then shares information with their partner monthly?  Does it work better to have both parties go over the monthly spending together at the end of every month?

It might be easier, but we prefer to have both of us involved.  We each manage our own accounts, and share management of the joint accounts.  We don't go over spending in detail every month, but we have a spreadsheet that both of us can access and edit for tracking.

Finally, if you have gone though this transition what was the most challenging aspect?  Is there anything you would have done differently?

It was pretty seamless for us, honestly.  I'm happy with how it's worked out so far.  We may consolidate more in the future, but the combined big picture with low level separate is working well for us.

Congrats on your upcoming marriage, and best of luck!

[SimpleCycle]

I think it depends on your personalities and money styles.  I am a "track it to the penny, calculate net worth once a month" money manager and my wife is a "just don't spend that much and maybe check on it once a year" kind of money manager.  My money management style takes more time, but it also results in fewer mistakes.

What we did was open a new joint checking and a joint savings (well actually a money market account, but same idea), and we set up direct deposit to deposit a nominal amount into each of our personal accounts and the rest into our joint account.  We switched all recurring joint expenses to come out of the joint account, and agreed together on which expenses were joint vs. personal.  Over time, we eventually opened a joint credit card and a joint brokerage account as well.  At first we didn't co-mingle assets we brought into the marriage, but eventually it ended up in one big pot, minus our individual retirement accounts.

I track everything (started in Mint, now use YNAB) and manage all the day to day finances.  We go over a high level summary of income and spending and net worth quarterly and make adjustments if we feel it is warranted.  It's easier for me to just handle most things and works with our general division of labor for household tasks.

I think the most challenging aspect for us was agreeing on general spending stuff.  We have a few things that are different priorities for us, and I probably stressed out more than I needed to over some small stuff.  On the flip side, some things that were important to me felt non-negotiable when they really shouldn't have been.  We've been married for 8 years now, and we've very aligned these days, but it took a while to get there.

Good luck and congratulations.

[Laura33]

We married at 30 and so had to navigate combination of assets.  One thing to keep in mind is that the actual accounts can be set up entirely differently as long as you are tracking them all together.  So for ex., it took us 10-15 years to get a joint CC!  We both had pre-existing CCs, and we tracked it all in Quicken under the same budget, so we just really never noticed the lack.  Similarly, all of our retirement funds were separate and have to remain separate by law, but because it's all in Quicken, we can see the big picture any time we want.  But we did set up a joint bank account and separate EF right away, funded by our existing individual accounts, and we used direct deposit to put the money directly in those account (while diverting a little bit from each paycheck into the individual accounts as play money).

In terms of who does things, I think that is entirely dependent on your personalities and preferences.  For us, the biggest argument was -- believe it or not -- how we should do Quicken.  I set up one dummy "budget" account, and then just wrote down any expense in that account, because all I wanted to do was see at a glance how I was doing against budget, and that accomplished that goal in the easiest possible way.  DH, OTOH, is an engineer, and so he insisted on setting up separate accounts for each individual bank account, CC, investment, etc., so that he could track all of the transfers and get a more accurate net worth picture.  The problem was, that meant that I had to enter everything twice -- any purchase on a CC first had to be entered in the CC account, then when I paid the bill I had to enter the check in the bank account and note it as a transfer from the bank account to the CC account.  He thought my approach was "stupid," I thought his was overly complex and let the perfect be the enemy of the good.  That was fun!!  ;-)

My biggest piece of advice is that even if you are authorized on his CCs, make sure you keep at least one where you are the primary user.  Generally speaking, the "authorized" folks don't get the same boost to their credit history/credit score as the primary, and I got pissed after a few years of being treated as if all our family income was his and mine didn't matter (he had the better credit score, even though I am the more money-focused one and had an equal salary).  So our next rewards card I opened in my name, and now he gets to be the authorized user.  For me, it's just a minor annoyance, because I do still have enough credit history of my own to give me a good score as well -- but you don't want to be widowed or divorced and discover that the bulk of the good-credit-generating history was attributed to your spouse. 

[Psychstache]

When we got married, we opened a new joint account with a credit union offering a real interest rate on the account (4% on balances up to 50k). We updated our direct deposit to go into the new account and switched credit cards to the account as well (used for rewards, always paid in full).

We briefly did a his, hers, ours set up with fun money, but it proved to be full of hassles and offered no benefits to us. We closed our individual checking accounts and have been on the singular joint account for 5-6 years now and no hiccups.

I am the primary finance manager in the house. It is just another part of the division of labor, and it is part of my piece. When I do our check our credit card statements, I check in to make sure charges are legit (ie, not fraud), and when I do quarterly updates on stache and NW, we review and talk about goals and plans.

Someone mentioned earlier about IRAs and 401ks having to stay independent, but we did switch into a Family HSA plan instead of individuals for simplification.

The solution for how to pay your financial planner is to fire them  ;)

I added all accounts to my Mint-like program that I used.

The hardest thing was honestly just working through the plan. I think this is a great example of "don't let the perfect be the enemy of the great" situation. Remember that none of the decisions you make are permanent. If you make a mistake, you can change accounts/open new ones/completely revamp the whole style. Just come up with an outline of where you want to go with the plan and start taking steps to make it happen. If you sit around and wait until you have all of the information and need the perfect plan, it'll never get done.

Good luck and Mazel Tov!

[FrugalToque]

A lot of this depends on your personalities, obviously, but I can give some basic advice, though it's all Canadian flavoured.

Create one joint account and put all of your paycheques into that.  If you're really going to share money, that's perfectly fine.  Mrs. Toque and I additionally kept separate accounts just because we didn't close them.  These accidentally came in handy for certain governmental-issued benefits (our savings towards TFSAs, for instance, are registered much more easily when the money comes from an account with just one person's name on it.  Ditto with the child-care benefits.)

As for who handles the money: whoever takes an interest in it.  While Mrs. Toque had savings before we were married, she didn't take a keen interest in managing it.  So while I always tell her how much we have saved for ourselves and for the kids, I've taken responsibility for it and she's okay with that.  This would not work had I married someone who wanted a more active role.

For the first few years, we went to the bank together (before Questrade existed) and made our extra deposits every year, set up RESPs for our children etc.  But as the years passed, I took a more active role.  That kind of thing is really up to the two of you.  As long as at least one person is responsible, you're good.

We did run a monthly budget for a few months, before MMM existed as MMM, and discovered where our money was going ($500/m on restaurants, I think, was the big shocker).  So that's a valid thing to do: just see where your money goes and if you're okay with that.

Mostly, we decided from the start that there was no "my money, your money" just "our money".  If that's your jam, too, then just go with it, but it's not for everybody.

Toque.

[Lady SA]

Same as most other posters.

We opened a brand new checking account at a local credit union after we got married. Started direct depositing paychecks there, then setting up all our household bills to be autopaid from this account as well.

Individual retirement accounts are by law separate and in each individuals name.

We dont have a financial planner, I do all the finances in the house and have access to all of DH's accounts. I just index invest so have no need to send money to a financial planner.

We also have a joint Mint account that we share the log in to to see our big picture finances all in one place. checking account, savings, loans, investments, property, ccs.

For ccs, either my DH or I will open the card and then add the other as an authorized user. Any new cards then get added to Mint so we can see all the transactions that are going through that card. Most of our day-to-day spending is with a cc that is paid off weekly.

Weekly, DH and I have a 10-15 min conversation to go over recent transactions in mint and correctly categorize some that were miscategorized and keep mint as accurate as possible because I pull data from it to use in our spending/savings plan. This is a natural point to discuss any things that are causing friction in the process and brainstorm what might make handling the finances easier.

Remember, you dont' have to set everything up perfectly the first time. You can always tweak and adjust your process over time as you discover things that are working really well as well as things that aren't working. It took DH and I probably almost 2 years before we finally combined everything, we just took it one account at a time, and problem solving one annoyance at a time, until we finally reached a point where there was a lot less friction and confusion over the state of our finances. What that state looks like exactly is different for different people.

[ginjaninja]

Thank you all for your responses and congratulations!  We are really excited. 

This is definitely a good problem to have, and I will try to tailor them to our needs as a family unit.  I am sure it will change over time too.  I do not want to let perfect get in the way of good, and we still have 4-5 months before we get married to figure it out.

Similar to @LifeHappens we will be buying a house close to the time we combine finances and I am not looking forward to the surprise expenses!  I do like the idea of trying to find some bank bonuses to capitalize on. 

I currently track every penny on a monthly basis and I really like the approach.  I will just have to make sure that this does not come across as controlling.  I like to challenge myself to improve and also to keep myself accountable.  If it becomes an issue and Fiance feels as if I am trying to manipulate him or judge about purchases we might need to take a different approach.  This is not something we have struggled with because we are both "save money for our futures first, we can spend what is left, but we don't have to" mentalities. 

We have both gone to my financial planner together and I think it was a good start.  He still feels like he cannot be a part of the full picture yet because he has not started working full time (he graduates from grad school next Thursday!!!).  I think he will be more willing to engage in the conversations on details once he isn't throwing every penny earned towards school. 

@Raenia I am really glad that it works well for you guys!  That is similar to where we are now, so if we like it we can keep it, and make changes as we evolve. 

@SimpleCycle I think that is going to be important to consider in all aspects of our partnership.  There are going to be things that I really care about and vice versa.  I need to be willing to sacrifice for him if I expect him to do any for me.   

@Laura33 that is great advice on the authorized user vs main cardholder.  I didn't realize how that would impact credit score but it makes sense.  I will make sure we keep that balanced between us. 

@Psychstache I think that we will eventually end up with everything totally combined but with a similar evolution.  Start with something, if it does not work, change, repeat. 

@FrugalToque I once joked with him that "my money is my money, and your money is my money" but I totally agree, all money is "our money"  We need to have clear goals and be a team on all decisions.

@Lady SA I can see us adopting your strategy too, I currently check my Mint ~weekly.  It makes it easier to use when I "hide from budgets and trends" transfers between accounts and other aspects weekly instead of waiting until the end of the month.  Making sure everything is categorized correctly and having brief conversations about it will be helpful.  I can see an example "wow we have spent a lot on eating out this month, what should we make for dinner out of our pantry for the next week or so....." and let it be natural.

[SaucyAussie]

Prenup.  That is all.

[LifeHappens]

Prenup.  That is all.

Way to toss a grenade into the campfire and leave.

[ginjaninja]

My mom taught me when I was little: "never ever sign the prenup, unless I have the money."

I think it is still sound advice :)

[Philociraptor]

Do we open new bank accounts that are joint?  Do we just transfer everything into one of our bank accounts and add an authorized user?  Does he start sending money to my financial planner?  Do we still have separate Roth and 401K accounts?  Do we combine all accounts on Mint?

Is it easier if one person handles most of the money stuff and then shares information with their partner monthly?  Does it work better to have both parties go over the monthly spending together at the end of every month?

Finally, if you have gone though this transition what was the most challenging aspect?  Is there anything you would have done differently?

I keep reading your name as Greninja, like the Pokémon ^_^

We combined finances when we bought a house (we got married a couple years later). What we did was add her name to my checking account first (joint, not authorized), then moved all credit cards and loans to pull from that account (we put all spend on CCs). Our financial planner is me, so I manage all investments using that joint account. All IRAs and 401(k)s are individual, but I have them aggregated under a single Personal Capital account, whereas the bank account and credit cards aggregate to a single Mint account (PC's investment tools are better, Mint's trend tools are better).

I check Mint daily and put together monthly reports on our investments (as seen in my journal). She has access to my LastPass an thus can check Mint or PC anytime she wants, as well as the spreadsheet where I enter the reports. We don't really go over it together on a regular basis, I simply showed her how to use the tools and nudged her to check on them a few times, now she checks them on her own whenever she wants to.

Most challenging was personal spending at first, since we had a lot of debt (student loans and car notes) and were making a lot less money than we are now, plus I was pretty new to MMM and wanted to be really aggressive with savings, so that rubbed her the wrong way. It makes sense why money is a primary reason people get divorced. As our debt load fell and our incomes grew we moved on from budgeting to just considering each purchase and assessing the damage after. Doing it this way, our spending has been trending down for a few years, though it is ticking up now as we've decided to make travelling a priority.

Since you will be seeing each other's spending up-close-and-personal, depending on your personalities it might make sense to take out cash for "spending money" when you first combine, that way nobody has to feel judged by their purchases. A quick look at your journal tells me that probably won't be an issue though, as your seem very frugal.

Cheers!

[daffodil2001]

Congratulations!

We combined our finances when we got married (about 7 years ago). My husband didn’t have any credit cards at the time so we added him as an authorized user to mine and added him to my bank account. We do a cash allowance/“fun money” that we can each spend however we want. Pre MMM it was $50 a week for each of us—fortunately I found MMM about a year after we got married and talked my husband down gradually to $60 a month. The fun money has worked great for us as a compromise between my preference to spend as little as possible and his natural tendency to spend his money with no recollection of where it went. We have a budget for all other spending and my husband keeps a ledger of our “buckets” for things that we have sinking funds for because he likes tracking it that way. We overhaul our budget each time we have a major life change but we’ve come to a point where it’s easy to agree on changes because we’ve identified our big picture goals.

[SaucyAussie]

My mom taught me when I was little: "never ever sign the prenup, unless I have the money."

I think it is still sound advice :)

Oh, you said all his money went to his education, so I kind of figured you were the one with the money!

[FLBiker]

Re: who manages it, for us, it is pretty much just me.  I find it interesting and not stressful.  DW doesn't.  So I have logins for her bank / investment / credit card accounts, etc.  I recognize that, for some people, that would be scary, but works for us.  I also solely determine our asset allocation (basic 4 fund portfolio, recreated in each account).

We do some CC reward stuff, and I'll literally apply for CC's for her, activate them, set up autopay and hand them to her.  The only part I can't do is cancel them, so I just tell her whenever one needs to get cancelled.

We don't really ever do budget / net worth meetings formally.  I'm definitely in the "one of the advantages of living well within our means is not keeping a detailed budget" camp.  I check our net worth / rebalance quarterly, and I'll sometimes update her if we've passed a round number (ie we recently passed $750K).  We're moving to Canada next year, though, which (with the exchange rate) could make us millionaires overnight. :)  Not that we'll exchange it all into CAD...

Money stuff (still) kind of stresses her out.  I enjoy it, so I'm happy to do it.  I feel like, letting the person who enjoys / is less bothered by a given chore / responsibility is a pretty good way to divvy stuff up.  And we tend to outsource things that no one enjoys (ie cleaning bathrooms).

[seattlecyclone]

It was a pretty gradual process for us. We moved in together before getting married, and started a joint checking account and credit card at that time. We'd each deposit equal amounts each month and pay for shared expenses out of there. After getting married we got rid of separate checking and savings accounts in favor of the joint one we already had. When we got to a place where we wanted to start doing some taxable investing, we of course opened a joint account for that. We still have separate retirement accounts since you can't combine these, and a couple of old credit cards from before we got married and never saw a need to add the other spouse as authorized users.

As for money management, I do pretty much all of it. She's much less interested in the details, and may not even know the password to all of our accounts. We probably should fix that.

[Rural]

We actually kept our individual accounts, and he just had his paycheck deposit switched to my account because, while he can and does manage money when he has to, he hates it. I deal with everything and occasionally remind him where the passwords are (in a safe deposit box) and where his key to the safe deposit box is, in case an airplane falls on me one fine day. I also made sure he's POD on my accounts and that he has a power of attorney on file with our bank (I insisted on joint taxable investment accounts, so that's okay for him). It's not ideal, but my work provides fiduciary financial planners who would also be available to him to resolve the estate business.


I'm not recommending this, by the way, just pointing out that a lot of methods can work if you are on the same page.

[deborah]

We’ve been together for many, many years and never combined money until we retired. As we’re not married, it makes sense to have combined accounts in case one of us dies and someone contests the will. It helps to prove that we are interdependent. It has also helped us to sort through the retirement account jungle, especially as our government has a habit of changing the rules almost annually.

While retirement accounts need to be separate for individuals, we have them set up so we both have access to all. This will help when one of us is incapacitated or dies. Similarly, we have joint accounts that we can both access, even though the money from retirement accounts needs to go to an individual account as per the legal requirements here. We pay everything that is joint from the joint accounts - including groceries, and periodically top them up from our individual accounts.

It took several years to reach our current set up. We sorted out the retirement accounts first, as that was the reason to start combining finances, but even they were set up differently to what they are now - it’s gradually evolved. Then we set up two joint accounts and gradually moved bills into coming from them. One of us would realise that a bill was a joint one, and we would discuss it before we started to use a joint account for it.

We’ve had joint accounts for about ten years now, and things are still evolving.

[CindyBS]

I married fairly young so I didn't have a long credit history when I got married although mine was excellent in terms of rating.

I kept 1 credit card in my name only that was from before I was married.  I kept it in my maiden name as well and did not tell the company  I married.  Each month I charge less than $100 onto it - mostly monthly revolving stuff like Netflix and pay it off in full.  For the other cards, throughout my almost 20 years of marriage, I have opened cards in my name and put my husband as an authorized user and some in his name with me as the joint user.

By having my own credit card that he does not have access to, I have maintained some separate credit that is not tied to my husband.

I'm not sure how it is now, but in the 1990's I had a job related to credit and saw too many windows being denied credit for things because every single thing on the credit report was in the man's name or joint with the man.  The women had no credit of their own.  It was sad.

[frugaldrummer]

We were in our 20's when we married and 50's when we divorced. We were both grad students when we married so had no real assets. It's so long ago the details are fuzzy but I believe we added H to my checking account; either way we ended up with one joint checking and one joint savings.

I paid the bills because ex's approach to finances was kind of "spend until you're out of money then don't spend until paycheck comes ". Now to be fair, we lived super-frugally as students and he wasn't spendy  at that time. I was much better though at balancing the checkbook so it became my job.

Problems with that approach that developed over time:
-because I managed the bills and he wasn't interested in sitting down and going over them, he really didn't have a good grasp on "where all the money went". This led to somewhat unrealistic expectations on his part that "I make all this money, I should be able to afford X,Y,Z". I scrambled and budgeted to keep us out of debt, while he was frugal day-to-day but became spendy on things like vacations (surf trip to Bali with the guys for example) or $5,000 for two acoustic guitars (for a guy who occasionally played the same dozen Neil Young songs he learned in college). He was invited to a special private sale and I think he didn't want to appear cheap. I would have been fine with him buying one or the other, but both was crazy and irresponsible.

- he only took interest in seeing the books once he was thinking of divorce ( I didn't know that at the time). Then I think he was upset there wasn't magically more money to support his plan (no, we spent it on the house you insisted on buying in the very HCOL part of town, the vacant lot you HAD to buy in Baja, the exotic surf trips,the $5,000 worth of guitars) while I squeezed the food budget and shopped at Ross to keep the budget balanced all those years and out of debt.

If I had it to do again, I'd still want to be the one in control but I would have made him look at the books and discuss them maybe every 3-6 months - just so he could see where the money went and perhaps could have had a more realistic view of things. It also left me in the position of being "mommy" having to tell him what we could or could not afford, rather than him understanding it himself. I also would have pushed to save more (luckily there was a fixed contribution to his retirement fund that couldn't be changed, so when we divorced I got half of that and half the home equity, which went a lot farther in a less pricey part of town.