Today we have another guest post from Katie who’s going to share her experiences in merging finances with her husband and how they navigated the touchy topic of prenups! Enjoy!
Money is a sensitive topic; and talking about money with your fiance can be downright awkward and uncomfortable. But it’s important to be on the same page about money before marriage!
So today, I’m writing about how my husband (Luis) and I chose to merge our finances in preparation for marriage. While there is no one-size-fits-all solution to merging finances, I hope my experience can give you some ideas about how to merge finances.
Plus, I’ve put together a free guide to help you start the money talk with your partner — click here to download it.
How to Merge Finances as Newlyweds
Learn Each Other’s Spending Habits
Before my husband and I got married, we had never intermingled any of our money. In fact, our first shared financial goal was to pay for our wedding! So it was a little weird for us to suddenly think about merging our finances after the wedding!
Even though we had always kept separate finances, we were very much aware of the saver-spender dichotomy in our relationship: I’m the saver, he’s the spender.
As “the saver,” I track every dollar I spend and I avoid consumer debt like crazy. As “the spender,” my husband, is much more laid-back about tracking his budget and his spending. In your efforts to merge finances as newlyweds, knowing each others’ spending habits is important!
Transparency
Luis and I were also very clear about our incomes, debts, monthly bills, and credit scores. Being transparent about these factors is very important for the sake of honesty, trust, and openness in the relationship and our future finances.
Since we were already transparent about our finances and our spending habits, there were no surprises when we signed our prenuptial agreement. Yep, we signed a prenup.
The Prenup
Discussing the terms of a prenuptial agreement might be one of the most unromantic things a couple can do to prepare for marriage! It was definitely awkward when we talked about our prenup in the weeks leading up to our wedding day.
A prenup might seem unnecessary in our particular situation because our incomes were almost exactly the same, neither of us had been married before, and we didn’t have any children. But we had some major differences in terms of assets, debts, and financial goals:
- He owned a home, I didn’t
- He had more debt than I did
- I was shopping for a rental property
- I had plans to start a business
We wanted to keep some of these assets and liabilities separate during the marriage — and that’s why we decided to sign a prenup.
Prenups are not as complicated as they’re made out to be — and, luckily for us, the process was pretty straightforward and easy. We didn’t include any clauses about infidelity, alimony, parenting, or ridiculous lifestyle clauses.
We agreed that our prenup would only serve ONE purpose: to keep our incomes, assets, and liabilities separate (unless we agreed to share them). Because of this, our prenup discussions were very laid-back and drama-free — nothing like what you might see on film and TV!
By the way, if you need help starting a dialogue about the idea of signing a prenup, be sure to download the discussion guide for some conversation starters.
Merging Our Finances
In our prenup, we laid out a plan for merging our finances during the marriage. In general, there are three ways couples handle finances during marriage:
- Joint (“ours”) – all money and all accounts are shared
- Separate (“mine, yours”) – all money is separate, no joint accounts
- Hybrid (“mine, yours, ours”) – some money is shared in joint accounts, and some money is kept separate in individually-held accounts
Luis and I settled on the “hybrid” option. Being aware of our saver-spender dichotomy, we both knew that merging our finances 100% wouldn’t work and would cause too many arguments.
For example, I knew that if we merged all of our money, I would definitely criticize the amount of money he spends on video games; and he would likely criticize my spending at the spa! That’s why the hybrid option was best for us.
Currently, we have a joint bank account that we use to pay for shared expenses; everything else is kept separate. And since I’m the money expert in our relationship, I take the lead in managing our joint funds. Of course, I always keep him in the loop and we make all shared financial decisions together.
Handling Difficult Money Conversations
Even though Luis and I both know I’m the money expert in our relationship — my opinions are not always welcome! See, I have very strong opinions about money and, at first, I would share my opinions freely with my husband.
Admittedly, I would often give my husband unsolicited advice, which would sometimes be perceived as criticism and the conversation would often lead to an argument. I learned very quickly that if he needs my help, he’ll ask for it.
Now, I no longer press my financial philosophies or opinions on my husband’s separately-held finances. Of course, I always appreciate when he asks me for advice and I happily share my expertise when he needs it.
This has worked so much better for our relationship! The key is talking about money honestly and openly.
Be Open to Change When You Merge Finances
Currently, the structure of our merged finances works very well for us because our incomes are almost exactly the same and we contribute equally to our shared bills and financial goals.
But we realize that we’ll inevitably need to adjust our system to accommodate any major changes in financial circumstances (like having children, job loss, salary reduction, health problems, etc.).
Adapting to change and being flexible is an incredibly important skill in personal finance, in marriage, and in life.
So who knows, our merged finances may look completely different in a few years! That’s why it’s important to continue to the money conversations — and to talk about it openly, honestly, and regularly. I hope this was helpful for you as you prepare to merge your finances with your future spouse.
Author Bio: Katie teaches busy people how to plan a wedding with in-depth guides about saving time, money and stress. Learn more about her straightforward approach to wedding planning at www.planningwithpoise.com