Money merging strategies for young couples

Among the many decisions newlyweds must make, deciding how to combine their incomes and share financial decision-making is at the forefront. Even in single-income households, individual assets and debts are typically merged, requiring couples to work together to determine their financial future. Here are some strategies for a successful money merger.

• Honesty is the best policy. Along with trust and honesty, open communication about finances is important in building a strong marriage. Without these components, it’s difficult to work together as a team toward common financial goals. Each person needs to be aware of any assets or outstanding debts belonging to their spouse. It’s okay for couples to have separate accounts so long as there are no secret accounts. Having joint checking, savings and credit card accounts creates transparency and requires couples to communicate clearly and work together. Even if only one partner generally signs the checks and balances the accounts, ideally both partners should have a clear sense of the financial picture.

• Make a plan. Create a budget that you can stick to that realistically reflects future spending. Decide who is going to have primary responsibility for writing checks or how you’re going to share them. Set a time to sit down together every month when it’s time to pay bills to talk about current and future spending so you’re on the same page. Agree on discretionary spending and saving after bills and expenses have been paid. The easiest way to keep money from undermining your marriage is to make a plan together, agreeing on where the funds will come from and how they will be spent each month.

• Balance the bills. More often than not, couples merging their finances have different incomes and amounts of accumulated debt. Couples need to agree on how much each person should contribute to the household and how past debts are to be paid off. There are a number of basic ways to divide the financial pie. If a couple has similar incomes and debts, a 50/50 split is a simple solution. A couple can decide to each contribute a set percentage of their incomes towards expenses and purchases.

Previous debts can be absorbed to become a shared expense or remain the responsibility of the spouse who accumulated them. Discretionary spending towards the household or things like vacations can be treated the same as other household expenses while personal purchases might be considered the responsibility of the individual.

There are countless ways to determine how finances are shared, but the important thing is that you and your partner are clear about each others’ expectations when it comes to spending and saving. (MS)

CAPTION: Merging money is often one of the biggest challenges newly married couples face.

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