Managing His And Her Finances
MARRIAGE AND MONEY
Managing His And Her Finances
Copyright 2005 Money and Credit Info
What are you to do when you discover that your spouse, who is the man/woman of your dreams, is really a nightmare when it comes to finances? Such is one of the adjustments that newly married couples are forced to make. We’re all used to managing our own expenses, and the marital union can throw a monkey wrench on our established financial routines. Though some couples have blended their finances together, a number have decides to keep their finances separate.
What are the pros and cons of each option? The benefits of consolidating funds into one checking account includes easier record keeping, simplified money management (ideally), and less paperwork when applying for a loan. In addition, the blending of finances can create a “unified front” in that aspect of a relationship that simply can’t be argued with. Obviously, the drawbacks are that both people are actively using the account and that will make it harder to track transactions and monitor your balance when you don’t know what the other is doing.
At the other end of the spectrum, maintaining separate accounts will allow each person in the relationship more freedom, because they won’t have to run purchases by the other person. In addition, doing so may create fewer complications in the relationship, allow each person to build their own good credit, and quite simply allow them to maintain a sense of independence. The most obvious downfall to a his and her finance arrangement is that it can be disproportionately unfair. If one person makes $60,000 per year, and the other $30,000, the person making the lower salary may not like the arrangement!
A funny term for this set-up is a “his and hers” account, which with demand you, if you decide to pursue the same, to find a system for paying house bills and handling other joint finances together. One option that has worked great for many couples is to create a third joint checking account and designate it as the “house” fund. You can set up your separate, individual checking accounts to have money automatically withdrawn from them each month at most financial institutions. You will have to sit down together and decide what amount needs to be in the joint account every month in order to cover the “combined” expenses. In a situation like the above—where one person makes significantly more than the other—it is usual for the higher wage earner to pay a larger portion of the expenses.
Another aspect to consider with his and her finances is credit. This can be considerably beneficial or problematic, depending on your individual credit ratings. However, at some point you may want to apply for joint credit with your spouse. You will most likely want to make big purchases together throughout the marriage such as a car, a house, or appliances, and it’s much easier to do that if you have joint credit. With joint credit, you will both be 100% responsible for the debt, even if you co-sign a loan with your spouse or add your name to your spouse’s credit card account. On the other hand, if you decide to maintain separate credit, the general rule is that you are not responsible for each other’s debt. (The exception to this is if the debt is considered a family expense.)
If your fiancé or fiancée has a bad credit, then you might want to keep your finances separate upon marriage to avoid having the lower score drag down the higher credit rating.
Here’s a point to consider: marriage is all about honesty. Be open to each other about your respective finances and act correspondingly and decisively about them, so when the big day comes, managing your finances will no longer be an issue for either of you.
Popularity: 15% [?]