Money and marriage can be a tricky business. A survey by SunTrust (soon to be Truist Bank) found that couples gave finances as the main cause of stress in their relationships.
That doesn’t have to be the case with you.
Over the last few years, I’ve interviewed couples who’ve done some big things with their money, like getting out of six figures of debt, starting a business together, and retiring early.
A huge key to making those dreams happen was being able to work together on their finances. If you’re looking to merge your money, here are five crucial steps to help make the process go smoother.
Table of Contents
Create & Design Your Dream Plan
First things first, let’s start defining what your goals are as a couple. Why? Too many couples don’t have a clear idea of where they want their money to go. They’re living paycheck to paycheck because they are trying to do everything and they end up doing nothing well.
They’re living paycheck to paycheck because they are trying to do everything and they end up doing nothing well.
Part of the problem with getting their finances squared away is how they approach it. For many couples, it can be a chore. The truth is many times, it’s described like one. Take retirement.
How would you plan for retirement? Would you pull up one of those free calculators with a ton of questions that are supposed to get you to think about every possible expense and scenario?
If so, you probably were overwhelmed by everything you think you have to consider and surprised by the number spat out that you ‘need’ to save.
And looking at that number isn’t really motivating, is it?
You two could do more if you thought of your financial goals in terms of planning an epic vacation.
One of the first steps in preparing for a trip is figuring out where you want to go and what you want to do.
For us, we usually have a couple of places in mind, so we start digging in and googling “[name of place] + awesome things to do”. We then sit down and talk about our options.
Sometimes we make compromises, other times we win each other over with why our idea is better. After we have a destination and a few ideas of what we want to see and do there, we then start working the trip into our budget.
You can do the same thing with your big goals. Yes, there’s a financial component to them, but you begin with defining what you want to do and then you can discuss hows about the money.
If you haven’t already, set aside some time so you two can share what you’d like to accomplish.
Planning your retirement is a smart move, but I admit it can seem too far away to picture clearly. In that situation, I’d suggest bringing the goal in closer and make a plan for the next year or two.
You probably have a few things you do agree on and that’s what you should begin. You may agree that the credit card debt is draining you and getting rid of it is a priority.
Having some wins with your money (including smaller ones) as a couple can strengthen your relationship and help you get more comfortable communicating.
Build a Financial Snapshot
The second key with merging your finances is knowing where you’re starting from. This can be scary, especially if you haven’t talked about this before.
When we were engaged it was an eye-opener and I admit it was awkward, but that initial conversation helped us to see what we needed to work on and it was an opportunity to come together.
Knowing your net worth isn’t complicated (basically assets minus liabilities), but if you have several accounts between the two of you, it can be cumbersome.
Today there are many free and low-cost tools that can pull your accounts and give your numbers quickly and easily.
Some of my favorite choices out there now are:
- Personal Capital – free financial dashboard
- Tiller – helps you automate your spreadsheets (our review of Tiller)
- Mint – ad-supported budgeting tool
Which one you choose is up to you, but make sure it’s a system you find easy. That’ll make your money dates go smoothly.
Building a Budget You Both Love
Budgets and spending plans – they seem to stress people out. No matter what you call it, just know that’s your plan for your money. You can make it as detailed or as big pictured as you want.
The key is getting a budget that is easy for you to maintain and that fits your personalities.
If you’re not a fan of traditional budgets and find them too difficult to track, here are a few ideas that may be a better fit for you.
- 50/20/30: This three bucket system allows you to take care of the bills, save for your future, and have some fun now. If you need to keep tabs on certain areas, like eating out, apps like Qube Money can help.
- Zero Based: Each one of your dollars has a purpose on this plan. While doing it manually can be a bit much there are some great tools like EveryDollar, You Need a Budget, and Tiller that can make the process much easier and pretty much automatic.
- One Income Living: If you two would like to retire sooner, then budgeting all of your essentials under one income is the simplest route to go. Justin and his wife from Root of Good were able to retire in their early thirties because of they kept their expenses low. You can use that second income to pay off your debt faster, save for a house, and increase your retirement contribution.
Even if one of you loves to make and update the budget, you should both be in the loop. It’ll keep both of you accountable and you can offer up suggestions to make the budget a better fit.
Merging Your Money (If You Want To)
You’re in a great spot now – you two have a goal or two that you’re excited about and you’ve agreed on a budget that takes care of the essentials and brings you closer towards your dreams.
Now it’s time to get your accounts squared away. Having a system in place that automatically moves your money to where you want to go can be a smart move.
Most couples I know are busy. They lead full lives and if they don’ have something in place, it’s easy to forget the tedious, but important things. Having your bill pay set up means you avoid late fees so more of your money stays with you.
Automating our money has been a tremendous help for us. Over the years, when we’ve needed to focus on our loved ones or work projects, it’s given us some peace of mind knowing that the important stuff is taken care of with our finances.
Deciding whether you want to go all-in with joint accounts, keep things separate, or a mix of the two is up to you. For us, we have joint checking and savings along with our personal checking accounts (for gifts, fun money, and eating out).
When you’re ready, here’s how to merge your money.
- Open joint checking and savings accounts (or add your spouse to yours). Having joint accounts can make things easier and allow you see what’s going on. At the very least you’ll be sharing many day-to-day expenses and you have a few milestones you’d like to tackle together. If you’re moving your money, make sure it’s with a bank or credit union that has features you need and want. You may find that a local credit union or community bank offers the service you prefer without the needless fees.
- Notify your Human Resources contact and have them update your deposits. You’ll want that money moving to the joint accounts and if you haven’t already, go ahead and have automatic transfers made into savings.
- Set aside an afternoon to set up your bill pay, transfers, and retirement contributions. It took me less than an hour to schedule and budget everything with the bank. The good news is once it’s done, you only need about 10 minutes to review things.
- After a month or so, you can close the old accounts and review your process. Keep your old accounts open to make sure you haven’t skipped out on any irregular bills like life insurance. Once things look clear, go ahead and close the unnecessary accounts. You don’t want to get any fees from inactivity.
Go on Regular Money Dates
You’ve done the heavy lifting, but you still want to stay on top of things. Having regular money dates is not only effective, but a wonderful way to connect.
Instead of pouring over spreadsheets, you can use the apps mentioned above to grab your numbers quickly and easily.
We try to keep our money dates positive and productive. Like a typical date, we try to make it special, maybe going out or sometimes staying it and chatting over drinks. In the beginning, we spent more time going over the numbers, but now we’ve found a rhythm and we look at it as a way to motivate and encourage each other.
In the beginning, we spent more time going over the numbers, but now we’ve found a rhythm and we look at it as a way to motivate and encourage each other.
We all grow and change, so don’t be surprised if you decide to shift things towards new dreams and goals. Since you already have a system in place, it’s usually a matter of logging and adjusting a few things.
We use our dates to check in with each other on what’s been going on with the budget, celebrate any wins we’ve had, and adjust things as needed. We have our monthly, but you two can do them as frequently as you like.
However you handle your finances, I hope you two find a system that allows you two to play to your strengths.