There are few other milestones in life as important as your marriage. It sets you on a journey that involves life, love, responsibility, and duty. And among all these elements, how you handle your money is one of the most crucial.
Importance of Money-management in your Marriage
The ‘Money talk’ isn’t exactly the first thing on our mind as newlyweds or spouses-to-be. But that does not mean both you and your spouse should keep it in the sidelines. Money management can change the dynamic of any relationship, and this effect is magnified when it comes to marriage.
So, the sooner you have this conversation, the better for your future. The focus should be on being honest and transparent with what you want and how you feel.
How to Manage Finances as a Couple
After you’re married, there are a number of ways you and your spouse can manage your finances. Broadly speaking, these can come under three main options. One is to handle your own money individually, the second is to unite a portion of your money, and the third is to merge everything together and manage it together.
Now, each of these options has financial benefits as and liabilities. Let’s go through the pros and cons too so that we can arrive at a better understanding of each option.
1. Manage your own finances separately.
In this option, you’ll continue managing your own income and finances. It’s a viable option for those who don’t want a joint account, common finance, etc. However, you’ll still have to agree on how to share and divide expenses. You can decide on a fair distribution of household bills, costs, and purchases.
It’s a great arrangement for couples who enjoy their financial independence. You don’t have to bear with the spending or frugal habits of your better half.
Without great communication, this style can lead to misunderstandings or resentment. It’s not easy to distribute household expenses fairly because they can vary depending on lifestyle, habits, children, etc.
2. Partially merge your finances.
The best way to partially unite your money can be to meet halfway. You can have a joint account in which both of you deposit an agreed amount or percentage. This joint account can meet household expenses. The remaining money remains in your individual accounts.
It’s a healthy compromise between shared responsibility and independent spending. As long as the joint account covers the expenses, your accounting is easy, and you still enjoy financial independence.
If you and your spouse have different incomes, you’ll need to agree on a fair contribution. It can be a difficult task since each of you enjoyed full independence so far. Also, keeping track of multiple accounts can be exhausting unless one of you is very organized.
3. Merge all your finances together
With fully merged finances, you can use a single joint account to collect all your earnings. This account will cover every expense for the household, from groceries to family vacations. You can also decide on specific amounts from this joint account for your individual spending.
You and your partner will enjoy complete financial transparency, and it’s much easier to track expenses. You’ll also find it easier to work on rationalizing your budget because it’s all in one big pot. The marriage also has the additional advantage of partnership and trust in whatever resources you have.
If you’re a newly-married couple, this option will take some getting used to. Naturally, there may be disputes on whether one partner is spending more than warranted. There’s also the danger of feeling like your partner is always overseeing your personal expenses too.
Regardless of which option you choose, your partnership must ultimately arrive at trust and communication. With the right transparency and attitude, you can grow into an arrangement that fits you best.