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Saturday, Feb. 14, 2015 12:03 am

How do couples merge their finances?

 Getting married means accepting change and combining two lives into one. After tying the knot, certain decisions and discussions are easier than others. Conversations about money may be one of the hardest topics for newly married couples to navigate.

Couples are heading to the altar later than they did in generations past. In the United States, the average age of a first marriage is now 27 for women and 29 for men. That means couples are bringing several years of life experiences to their marriage and individuals are possibly leaving behind entirely autonomous lives. Many people have had a few years in the workforce and may have accumulated savings or, conversely, debt. Upon getting married, couples may have some questions as to how to handle financial issues, particularly if one person is contributing more to the household account than the other.

There’s no one-size-fits-all scenario that works for all couples when it comes to money management. Similarly, what worked for parents or grandparents may not necessarily be the right fit for couples today. It may take some time and trial and error for newlyweds or cohabitating couples to find a system that appeals to them. The following are a few ways for couples to approach their finances.

Separate but equal
Some couples opt to continue on just as they had before they got married. That means maintaining separate banking accounts and pooling resources toward bills and other expenses. As long as the bills are getting paid, then maintaining separate accounts can work for some, particularly those who do not want to account for every purchase and want to maintain some financial freedom. This scenario can become problematic when couples are saving toward a larger goal, such as a vacation, home or car. Each person may have different ideas on how to save and contribute toward the goal.

Mine, yours and ours
If you decide to pool your resources, there are still a handful of ways to go about it. One way is to pool all of your assets and pay for everything out of a joint account. Another option is to maintain separate accounts but create a joint account for those larger, shared expenses. For example, you may open a house account, out of which your housing and child care expenses are paid, but maintain separate individual accounts for personal expenses.

This situation may work but only if the ground rules are established right away. Decisions on how much money to put into the shared account can be stressful. Does each person contribute equally or are contributions contingent on salary? Which purchases will be shared jointly, and which ones will individuals take care of on their own? Lots of questions arise, and it may not make money management any easier.

Combined accounts
Combined accounts used to be the norm for married couples. The “what’s mine is yours” approach may not be so easy to adopt, especially when couples spent so much time independently before the marriage. Couples who pool their resources should learn to accept each other’s spending habits.

According to past census data, 32 percent of wives in 1960 were in the labor force, so combined accounts were common and very often managed by husbands. But today the majority of homes are two-income households, so making all purchases out of a single joint account may not make as much sense as it did in decades past.

Decisions about money turn up as relationships take new turns. Newlyweds and established couples may need to modify their spending and saving habits as their relationships change. –CTW


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