Tips for managing your finances once you tie the knot

By Nikki Young, CFP^®, Financial Advisor

Some couples face a difficult question when they decide to tie the knot: Should they combine their finances, keep them separate or do both? What they decide depends on different factors, including how comfortable they are comingling their money and whether they have confidence in their partner’s spending habits. Studies have found that couples who combine their credit card, bank and investment accounts are happier in the long term.¹ Their pooled resources help them achieve traditional goals such as saving for retirement and buying a house — and leads to greater wealth. The Wall Street Journal reports that married couples hold four times as much wealth as unmarried couples who live together, and researchers say combining finances is one reason for that.²

There are other benefits to pooling finances, according to research published in the Journal of Personality and Social Psychology.³ The study shows that couples who pool all of their money experience greater relationship satisfaction and are less likely to break up. This is especially true for couples with low household income or those experiencing financial distress.

Survey reveals financial infidelity

According to a 2022 survey by CreditCards.com, 43 percent of couples have only joint banking accounts, 34 percent have a mix of joint and separate accounts and 23 percent keep their finances completely separate.⁴ Thirty-two percent admitted to being “financially unfaithful,” by doing one or all of the following:

• Spending more than their partners would be comfortable with
• Holding secret debt and/or a secret credit card, checking account or savings account

Millennials were more likely to keep financial secrets from their partners, and the reason could be because their relationships are in earlier stages than respondents who are Gen Xers and baby boomers.⁵

Tips for strengthening financial compatibility

Money is a common cause of stress in relationships, but the American Institute of CPAs (AICPA) has some tips to help reduce the chances of financial tension between couples: ⁵

• Start a conversation early in your relationship. Be open about debt, any specific financial goals and your money habits. Your early conversations should include discussing your income, current assets and personal beliefs about how to best manage money.

• Establish a joint spending and saving plan. A simple joint budget that you create together is a good place to start. Add up your monthly income (after taxes) and anticipated expenses. Refine your budget as needed. Also, check to see if you can save money by combining certain expenses, such as insurance.

• Set short- and long-term priorities. Do you want to buy a new house, wipe out debt or plan a trip of a lifetime? Talk about your priorities and goals and set goals together — as a team.

Like all plans, some adjustments may be needed. If you are having difficulty managing finances or aren’t sure how to proceed financially as a couple, please feel free to email me for assistance at nyoung@nwfllc.com or visit my website, nyoung.nwfllc.com.

¹ The Wall Street Journal, Dec. 4, 2022: Couples Who Combine Finances are Happier, so Why Don’t More Do it?

² The Wall Street Journal, Nov. 7, 2022: Moving in Together Doesn’t Match the Financial Benefits of Marriage, but Why?

³ APA PsycNet: Pooling Finances and Relationship Satisfaction

⁴ Creditcards.com, Jan. 27, 2022: 32% of Coupled U.S. Adults Have Cheated on Their Partners Financially
⁵ 360degrees of Financial Literacy, American Institute of CPAs: Love & Money: 5 Steps to Help Couples Strengthen Financial Compatibility

This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. This material was prepared by LPL Financial.