Marriage and Money

by on September 2, 2011

There are so many different marriage scenarios that make it somewhat difficult to manage your money during marriage.  The key factors that determine how you should manage money in marriage are your age, income disparity, spending differences, number of marriages, desire for independence, and financial prowess.  We’ll cover each one briefly to see what type of money management method works best with each factor.

Age.  Generally, the older you are when you get married, the more financially independent you are, and therefore you will be more likely to want to keep at least some control over your finances during marriage.  On the other hand, young marriages have very little financial history and it is much easier to merge your finances and accounts.

Income Disparity.  If one spouse works and one does not, it is hard to get financial dependence from the non-employed partner.  Also, if one spouse makes hundreds of thousands and the other makes tens of thousands, then there is also a big income disparity and it makes it difficult to try to divide expenses.  In these cases, it generally makes sense to have joint accounts, or to have separate joint accounts, where the bills are paid by the higher wage earner and the lower wage earner or non-employed partner has an account for their private spending (gifts, personal items, discretionary spending).  If incomes between the two marriage partners are about equal, it also works to have separate joint accounts and to divide the monthly expenses between the partners.

Spending Differences.  If one spouse is a spender and one is a saver, there will always be tension between each other.  Especially if the spender is not an earner.  When spending patterns vary dramatically, it sometimes make sense to have separate accounts so that each person feels like they have control over their spending and saving.

Number of Marriages.  If it is a second or third marriage, you’re more likely to want separate accounts for your money.  Not only do you have a complex financial history, but you also have prior obligations that are not part of your current marriage.

Desire for Independence.  This is a big factor in how you manage your money in marriage.  If you want to be independent financially (and I know a lot of people like this), then it works well to either be in control of a joint account, or have separate accounts.

Financial Prowess.  Sometimes partners want separate or separate joint accounts, but one partner is much better handling finances.  This is a great case for having either a joint account managed by the financial adept spouse, or, if you have separate accounts, to have money transferred to the financially inclined spouse to manage the family budget.

Kids.  If you have kids before you get married, it may make sense to have separate accounts.  Especially if you are older or widowed and want to pass your inheritance to your children (and not your spouses).

So, in summary, setting up the right accounts during marriage can ease the difficulty of managing the family budget.  Before you make a decision, talk with your spouse and make sure you both agree.  If you don’t agree, there will most likely be resentment and bitterness down the road.

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