Engaged couples have a lot to plan and prepare. Wedding day logistics can be even more complicated when one partner has a demanding career with the military or an emergency response agency.
But the day you tie the knot is just that — one day. Afterward, other important life planning matters like financial management will require the same level of organization and attention to detail in order to keep you on solid ground for years to come.
When it comes to managing your finances after getting married, you'll have three options to consider, each with its own pros and cons.
1. Combining all finances
In a marriage, two become one. For some newlyweds, two (or more) bank accounts are united as well. Given the pace at which bills are paid, groceries are purchased and savings are bolstered, there are quite a few advantages to operating the household budget from joint accounts. Combining finances creates greater transparency and easier access to funds for both parties, helping facilitate better communication and budget tracking.
As paychecks and financial obligations fluctuate, couples who follow this approach don't need to make dramatic shifts in how they divide up their income or responsibilities. Plus, with two pairs of eyes actively monitoring an account, budgeting mistakes are less likely to happen. Couples who are on the same page can also grow together while jointly working toward important financial goals.
The downside is that this total transparency can create a perceived loss of financial independence, and it doesn't always allow for differing opinions and spending habits. It can cause resentment or even prompt secrecy.
A recent poll found 44% of people in a partnership were either harboring a secret account, dealing with hidden debt or covering up spending habits their significant others would disapprove of. However, 57% of people believe financial infidelity to be as bad as, or worse than, unfaithfulness.
2. Keeping everything separate
Many partners agree to keep accounts and individual financial matters to themselves. This helps each person maintain a desired level of financial independence. If both parties communicate frequently to reconcile accounts and accomplish shared goals, a separate system can work well.
However, this approach doesn't remove the emotional aspect of money management from a committed relationship. Keeping separate accounts and responsibilities can create a sense of imbalance. For instance, if one partner pays most of the bills while the other spends a little too freely, credit card bills and emotions can run high.
Also, dividing the household's budget and obligations in two can complicate even the simplest transactions. Everything from buying groceries and gifts to financing a vacation can create stress if spouses don't have a solid plan in place. In an emergency, accessing the other partner's personal accounts can be a complicated process.
3. Taking a hybrid approach
Given the pros and cons of both of these financial management strategies, many couples choose a blended model. This might involve keeping personal accounts for discretionary spending but combining most income into a joint account to cover household expenses. Each partner could also contribute to their own personal savings in addition to a shared savings account.
The best approach to managing finances after getting married is one that you can agree on together. Whichever strategy you choose, honesty and good communication will help make your money management more successful. Ultimately, having someone by your side when working toward individual and shared financial goals is something to love and cherish.
Not sure where to start? Download AFBA's 2020 Financial Planning Guide for our best-in-class collection of resources — from budgeting worksheets to military benefits information — designed to help you more easily establish and achieve your financial goals.