One of the things Juan and I were adamant about in our marriage was combining our finances.
Combining our finances – why and how we do it
You would think that as kids of divorce (which we both are) where money problems were a huge factor in the split, we would want to keep our finances separate to avoid the past mistakes of our parents.
After all – doesn’t combining our finances put us at risk? Money problems are always cited as one of the top sources of disagreements in couples. Combining our finances practically guarantees that our points of view about money would meet and might even cause tension.
Plus, it seems easier to keep our finances separate. We could easily split our bills 50-50, Juan would have no say in what I do with the rest of my money, and vice versa. Why wouldn’t we choose to keep our finances separate?
Combining our finances – why we do it
As I said before, Juan and I are both kids of divorce. Our parents split for many reasons, but there’s no denying that disagreements regarding money played a significant role.
You might think this would make us want to keep our finances separate. However, this is exactly why we both are adamant about combining our finances.
Here are a couple of reasons why we insist on combining our finances:
There are no secrets
As soon as we got married, we agreed to deposit all of our income into one bank account and have every bill come out of that same bank account.
Why? Because doing so ensures that there are no money secrets between us. This way, Juan knows exactly how much I make, I know how much he makes, and we both know how much we’re spending on everything.
When couples hide income or debts from each other, it’s just another obstacle that will strain the relationship. No matter how good you are at keeping secrets, dishonesty finds a way to destroy relationships no matter what.
It simplifies paying the bills
This is my favorite reason why we are combining our finances – efficiency!
It’s simple – when all of your bills come out of one account, they’re much easier to keep track of. For couples like us, who are in $50k+ debt with about 15 credit cards/loans to manage, anything to simplify our finances will help!
Think about it. No matter what, you will always have to keep track of how much your bills are and when they are coming out of your account. Now, if we weren’t combining our finances, we’d ALSO have to be keeping track of which bills are coming out of which account. Combining our finances eliminates that last layer of tracking.
So, how are we combining our finances?
Combining our finances – how we do it
1. Open a joint checking account (or use one of yours)
This is entirely up to you guys and what you each want in a bank account. For us, we used my existing checking account with Capital One 360 since there are no fees and we like how we can set up multiple savings accounts with ease. But again – this is entirely up to you guys! Do your research and talk with each other about what you’d both want in a bank account.
Once you’ve decided on your one joint checking account, don’t close your accounts just yet! You may still use your separate accounts if you choose to do #4 below.
2. Update all direct deposits to flow into this account
Now that you’ve set up your joint checking account, it’s time to update all your income to flow into your new account.
If you have an employer, there is usually a form you have to fill out and submit to your HR or benefits department. If you’re a freelancer, that means updating all your payment collection sites (like Paypal) to route to this new bank account.
3. Change all automatic bill payments to come out of this new account
Once you’ve got your income flowing into this account, it’s time to update all the outgoing transactions.
Now, this may take a while – I would suggest one of two things: either you 1) set aside time to do this all in one go and update your bills all at once, or 2) you take a more gradual approach and change your bills as each due date approaches.
4. (Optional) Keep your current separate accounts and use these as individual “allowance” accounts
I’ve said it before and I’ll say it again – in order for a budget to work, it has to fit your lifestyle.
That being said, it’s important that you and your spouse get some fun money each month. Doing so will make living on a budget more sustainable.
If you’re following the 50-30-20 budget, meaning you get 30% of your income to your wants, you can probably split it 10% to you, 10% to your spouse, and 10% as a joint allowance.
For us, Juan and I agree that we get to spend our allowance money on whatever we want – no questions asked. Our allowance each month is relatively small compared to our combined income, so these purchases aren’t usually a big deal to us.
Just a note – it might be a good idea to come up with a purchase threshold for you and your spouse. For instance, if there is a purchase that is greater than, let’s say, $500, then that purchase must be discussed between the two of you first before buying. This threshold, again, is entirely up to you – it can be as low as $50 or as high as $500. This depends on your situation but it all comes down to increasing communication between the two of you.
Combining our finances – final thoughts
I’d be lying if I omitted the role that our Catholic faith played into this decision. In the Bible, it states:
That is why a man leaves his father and mother and clings to his wife, and the two of them become one body (Genesis 2:24)
We knew that agreeing to be married meant that we were to become one as a household. Combining our finances supports that decision. Ultimately, this is why we decided that combining our finances was the way to go.
What about you? Have you combined your finances? Why or why not?