If you're one of the record number of Americans getting married in 2022, you may have started to consider how you and your partner will handle your finances.
"I try not to be too preachy, but in my experience working with couples, in most good marriages there is this feeling of, 'We are completely in this together and we share everything,'" says Zachary Bouck, managing principal and chief investment officer at Denver Wealth Management in Greenwood Village, Colorado.
"A good household is kind of like communism," says Bouck, who is a certified investment management analyst and financially advises couples. "If one person is earning $50,000 a year and the other is earning $200,000 a year, everything goes in the pot and is split equally."
Deciding how to manage money as a couple is "a very personal conversation," Bouck acknowledges. Still, "most people that go into marriages with the idea that they're in it together for the long haul and end up sharing assets — in our experience, it seems to work a little bit better than people who, from the beginning, try to keep things separate."
Here's the argument for commingling your assets when married, according to financial advisors.
"I would never go tell a client, 'You guys are terrible people. You don't merge all of your assets together,' because it's a very personal decision," Bouck says.
"But if a client asked me for my advice and what I think: Marriages tend to work better when there's no hiding of any assets, there's no hiding of any accounts, and you have a full view of each other's money."
The way you've lived before you got married matters, too. If this is your first marriage and you have an established career, "and you've had separate accounts up to this point, it can be really hard for someone to give up the freedom of having 100% of their own checking account," says Bouck.
Conflict often arises because "the spending habits you had separately aren't necessarily going to make the other person comfortable," like spending hundreds of dollars a month on clothes, for example. "So you have to sit down and communicate about that," Bouck says.
It's important for each partner to take part in financial planning and in knowing what's going on with your money. "You owe it to your partner to have a finance date once a month," Bouck says.
Amanda Clayman, a financial therapist in Los Angeles, agrees. Whether or not you decide to combine your finances, keep them separate, or share some of your money, communicating about money is key, she says.
To start your marriage off on the right foot, finance-wise, both couples need to participate in money decisions and each partner must be transparent about their money. There needs to be flexibility to change, if necessary, and your system needs to be sustainable, Clayman says.
Often, Bouck sees clients that fit into the dynamic of "the nerd and the free spirit," he says. "The nerd is the one person who will just start paying the bills, they'll make sure the taxes get done, they'll check the investment accounts," he says.
A free spirit, on the other hand, is happy when "someone else is paying the bill and, as long as their taxes are filed," he says.
When you're not taking an active role in shared finances, though, you could end up getting burned. The free spirit in this scenario "is the person who would be shortchanged in a divorce," he says.
Taking joint responsibility from the get go, even if one person takes the lead, can benefit both of you in the long run. "It seems like when people have that mindset of, 'Of course we share our money, of course we share our debt, of course we share our assets,' it seems to me like that mindset is really, really, really helpful," Bouck says.
By contrast, "when you have the opposite mindset of, 'Well, this is my money, and this is my inheritance, and that's your debt,' you're kind of starting to keep score in your mind in an unhelpful way," he says.
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