What Happens to your Finances once you get Married?

After marriage, you have the option of combining your partner and your finances, whether that be a joint bank account or taking on each other's debt. When you get married you have the option to consolidate all of your finances. This comes with both pros and cons and should be talked about before going ahead and combining all of your finances. Many couples benefit from combining finances. It can make money simpler to manage and help couples work towards long-term goals. 

Benefits

Working towards goals

When you combine finances you can work as a team to meet any financial goals you may have. You can make sure you are on the same page and make informed decisions about what to do with your money together. 

• Paying off debt - You both can put together an efficient plan to pay down your debts because now you can pool your money together. This could include refinancing debt under a single loan or prioritizing certain balances to reduce interest. 

• Saving for purchases - You can meet your savings goals faster if you work together and have two incomes going towards those goals. Whether it is a new car or a nice holiday you can meet those goals faster if you are working together. 

• Buying a home - Cooperation can be even more important if you are planning to buy a house together. If you are applying for a mortgage together, both of your incomes and debt and credit histories are applicable. You also have to go through the process of addressing issues such as credit utilization or errors in your credit report which can be much more difficult with two accounts. 
• Saving for Retirement - Combining your finances lets you make and work towards an efficient retirement plan that can make the most of your money in the long run. 

Simplicity

Combining your finances allows you to manage fewer accounts and reduce the amount of stress that comes with managing your finances. You have fewer accounts to keep track of, reducing the risk of errors within those accounts. Also, with combing your finances you could find yourself moving around money less than you were prior which can save time and money. Budgeting is also easier when you are looking at one stream of income rather than two. You can divide up the money more efficiently without sifting through multiple accounts constantly. 

Drawbacks

Unequal Contribution

When one spouse comes into the marriage with little money, combining funds can cause problems. The same can be true if one partner has a lot more debt than the other or a poorer credit score. If you put your name on those accounts it can lower your credit score as well which would not be beneficial in the long run. 

Different Spending Habits

If you and your significant other have different spending habits, it can be difficult to combine your finances. For example, if one of you is a saver and the other is spender then sharing finances can be detrimental to future goals because you are giving the spender more to spend. This can be mitigated through a household budget that both of you are willing to stick to and trust. Both parties should have equal say in the budget, so no conflict arises from it. 

Takeaways

Generally, married couples choose to consolidate some or all of their finances to make it easier to reach financial goals. This is a big process and is worth thoroughly working with your partner to figure out what is best for each of you.