When a couple gets engaged, it’s important that they discuss how they will deal with money during marriage. Two becoming one is a powerful concept, and that is also true in marital finances.
First topic of discussion: will you combine finances totally? After you decide on that, you’ll need to know how to combine finances with your spouse.
Needless to say, I have some strong thoughts on what the conclusion of your discussion with your fiancé should look like. There are so many reasons why I believe married couples should combine every aspect of their finances, but I’ll share the top four reasons here.
1. You’ve made a covenant
Are you married? Congratulations! You’ve entered into what’s called a “covenant” with your spouse. A covenant is kind of like a contract, but not quite. A “contract” is a document that binds two parties to do certain things.
If contracts could talk, they would say something like “I’ll do this and this, if you hold up your end and do this and this. If you don’t hold up your end of the contract, then this contract will be voided.”
Yikes. Don’t slip up.
A covenant, on the other hand, is an agreement between two parties that acts as a promise. It sounds something like this: “Everything I have is now yours. I promise to give you this and this, and I will give you all that I am no matter what you do in return.”
Does this sound like a better commitment in marriage? That’s because it is.
What’s mine is yours
When you enter into a covenant marriage relationship, you commit to being “one” in every area of your lives. You have one home, you sleep in one bed, you are one sexually, and you should be one in your finances. This means that your day job salary is now not just for you, it’s for your spouse.
What about my 401k?
Yep, that’s your spouses too. All of your income, savings, and debt now belong to your marriage. Because you’ve committed to giving love to each other for the rest of your lives, you should commit to sharing money for the rest of your lives. What’s mine is yours.
Even if you disagree with me and think that “what’s mine is yours” should not be a basic tenant of what marriage means, I think you would agree that honesty is important in a marriage.
Wouldn’t you agree?
Lies and deceit are known culprits of tearing down marriages and any other relationship in life, for that matter.
And do you know what the opposite of deceit is? Full transparency. And transparency in marital finances means that nothing is hidden.
In order to have nothing hidden and fully out there, you need to have only joint accounts. It doesn’t matter how many checking accounts, savings accounts, investment accounts you have.
They should all be made “joint” accounts so that you both have access to them. This means you both know about purchases, and deposits. Or at least you have a historical record if you want to go back to check.
Having only joint accounts is critical to building transparency in your finances and also in your relationship.
3. Building Teamwork
Want a healthy marriage? Practice working as a team with your spouse. On everything.
Parenting? You better believe the only way to win is working as a team. Dealing with in-laws? Team work: critical.
What does teamwork look like in marriage? It definitely looks like sharing the ball, consulting each other to make decisions, and honoring one another to keep team morale high.
Having joint bank accounts in marriage is an essential way to build teamwork in a marriage. You’ll need to budget together, review credits and debits to your account, and hold each other accountable to “your money”.
I can’t think of a more simple way to learn how to work together and hold each other accountable in marriage! The teamwork you can build by sharing a bank account will transfer to other areas of your marriage.
4. Building Wealth Together (Momentum)
If I haven’t convinced you yet that having joint bank accounts is wise in marriage, then why don’t we think about your bottom line.
As a couple, you should have some financial goals or at the very least see yourself retiring some day.
You’ll need to build wealth together to do that.
Building your jointly owned assets like retirement accounts, investment accounts, and house equity is what will enable you to choose when to retire.
And guess what. Wealth building is a lot easier with two people.
First off, no one gets left behind. If only one spouse works, then how would you have split accounts? The non-working spouse wouldn’t be able to have a retirement account! That would be a travesty.
Build wealth TOGETHER. When you get to retirement, it’s possible that both of you could have two different retirement accounts (401k and Roth IRA). This would give you great flexibility to maintain your wealth for the rest of your lives as you make withdrawals from the accounts that make the most sense.
If you both lived on a single disbursement from only one of those accounts a year, then three of the four accounts would keep growing. Each year you could choose strategically which account is the right one to draw from.
Simply put, you can get to your goals faster if you combine all of your income and all of your expenses. You’ll save more if you earn more. And you’ll definitely find that it seems like you earn more when your incomes are joined.
Inching towards your goals TOGETHER is an extremely rewarding experience. Hop on board!