Money management can be tough when you are single, but incorporating your spouse’s finances when you get married can be overwhelming. It is nothing new that financial conflicts can cause major problems in relationships and is one of the main reasons couples end up in divorce.
Traditionally sharing finances was a part of the journey after marriage but nowadays it is becoming more and more common for couples to either divide expenses down the middle, or delegate certain expenses to each. This is becoming more common especially for working couples.
However, at the end of the day, there are advantages of sharing your money with your life partner. This does not mean that you cannot have separate bank accounts for certain things. But you have to make a financial plan TOGETHER and consider all the money to be family money to make both your money and your marriage work. Here are a few practical reasons why married couples should share their finances.
1. Builds A Stronger Relationship
Many couples avoid discussing finances and it is the number one issue that they wind up bickering about. It is also the second leading cause of divorce in America.
However, by sharing your finances with your spouse you start to work as a team to build your financial roadmap and start thinking in terms of “us”. You also learn to see individual financial decisions from your partner’s perspective instead of your own which will result in an overall stronger and happier relationship.
2. Enables You to Understand Household Budget in Totality
When you share finances you have what you call a “household income”. You can figure out what lifestyle you as a couple have together if you have a full picture of your total income including both your earnings, investment income, and income stream. Also, you will fully understand where the money is going after each paycheck, which would not have been possible if you had kept your spending from your spouse and your spouse did the same to you. It will also lead to transparency which has a positive impact on your overall relationship and will help you to figure out where to cut costs to save money for the future. However, having a “household income” does not mean that you cannot assign money for yourself, to spend as you see fit.
3. Allows You to Save For Short-term and Long Term Goals
Sharing finances will fully allow you to plan for your future and create a list of actionable steps that can bring your short-term as well as long-term goals to fruition. Whether you saving for the holidays, a vacation, or a buying a vehicle you can achieve your goal faster and also reduce the risk that your partner may become upset or bitter about money matters in the future.
Your spouse’s cooperation maybe even more important if you are planning to buy a home together because if you are applying for a mortgage together, both your incomes and debt and credit histories are applicable. Secondly, you may also have to address issues such as credit utilization before you are approved for a mortgage. This process will be more of a headache if you have two sets of accounts instead of one.
Sharing finances and having a shared budget can make these decisions easier and can envisage a future that meets both partner’s desires.
4. Allows You to Make Retirement Goals
Saving for retirement needs to be coordinated as one day neither of you will be working. When you share finances your “retirement savings plan” will be the result of a joint decision based on your long term commitment and saving level you are both comfortable with. But if each of you contributes for retirement separately it will be much harder to coordinate these goals. That is probably why couples who share finances tend to save more.
5. Leads to a Family Focus, not a Self-Focus
One of the benefits of sharing your finances is that if one person goes through a period of unemployment the other steps in and helps. If one of you is sick (or just delivered a baby) or if one wants to start a business the other one covers. You may be more likely to take certain career risks if you have someone to back you up. And in the end, these risks can be good for you. But on the other hand, if you keep paying your share of bills you might be less likely to take the leap. When you are committed to the relationship then both of you can start to do what is best for your family.
6. Help in Case of Emergency
Marriage means complete transparency. If you do not provide your spouse with your financial information it can build distance. It can also be dangerous if one of you is incapacitated, hurt or worse and the other needs access quickly. Your spouse will be able to continue managing your financial assets and also help support your responsibilities. But if you keep your spouse in the dark about your financial situation it will a challenge for him/her to help out in the case of an emergency.
If you are looking to build a life together than the best thing is to be open and share goals. The goals between two people cannot be aligned without talking about money matters and coming up with a solid plan to deal with budgeting, spending, and investing. In the long run, this will help you to grow closer financially as well as emotionally.