Whether you’re getting married or moving in with someone, combining households can be tricky and at some point you’ll have to talk about money. For many couples, one person is known as “the saver,” and the other is known as “the spender,” and that can lead to problems both personally and financially. It’s estimated that financial problems contribute to 20% to 40% of all divorces, with 41% Gen Xers citing it as a primary reason for divorce, compared to 29% of Baby Boomers.
When considering how to combine finances, many couples opt for at least one joint bank account. In fact, the latest census data available indicates that as of 2023, 77% of married couples who held any kind of bank account had at least one joint account they shared with their spouse or partner.
Budgeting for newlyweds and moving in together finances requires a lot of conversation and a great deal of planning to make sure you start your new life together as friction-free and prosperous as possible.
Why Money Conversations Matter Early
Before you can consider things like where to live, you’ll need to figure out what you can afford to pay in rent or a mortgage and your preferences. Will you choose a more expensive apartment because of its location, size, and amenities or a more affordable place so you can save up for other goals—such as a down payment on a home? It’s important to make sure you’re both on the same page before making such a major decision. Doing so beforehand can help you avoid disagreements over finances or find a way to resolve them.
Discuss Financial Habits, Goals, and Expectations
Being upfront and honest about how you handle money and your financial goals is crucial to getting off on the right foot in your new life together. You’ll need to consider what you both bring to the table in terms of income, savings, debts, and spending habits. You’ll also need to address your goals, such as getting out of debt, saving up for something important (like buying a home) or building an emergency fund.
You might also consider whether you’ll start a family, how much it would cost, and maybe set up an education fund. Retirement planning should also be addressed, especially if you’re getting married or cohabitating later in life. What’s really important is to be completely transparent. No one wants to be surprised by finding out that their spouse or partner has an enormous debt.
Decide What to Combine and What to Keep Separate
After sharing financial details and setting goals with your partner, you’ll have to decide how you manage your finances individually and as a couple. There isn’t any particular right or wrong way to do this as long as you find an approach that works for both of you.
Common Approaches to Managing Shared Finances
There are three common ways of merging finances:
- A fully joint account: All your income and expenses are combined into one account with both your names on it. You can both make deposits and withdrawals.
- Separate accounts: You each keep your own bank accounts but work together to set your financial goals and budget, including which of you will pay each of your bills.
- A hybrid approach: You both have your own personal accounts with funds that you can each spend as you please, while each of you contributes to a joint account to cover your shared expenses.
Set Up a Shared Budget for Household Expenses
No matter how you handle your accounts, you’ll also need to put together a budget for your household expenses and how you’ll save for future goals. Many couples also agree on a certain budget amount that they can each spend however they like.
Create a Plan for Bills, Groceries, and Everyday Spending
Put together a detailed budget that includes your monthly bills and expenses. Budget and financial experts recommend the 50-30-20 rule for household budgeting, where you spend 50% on your needs, 30% on your wants, and 20% on savings and debt. We can break this down like this:
- Needs are the things you absolutely must have to survive. This includes rent/mortgage, utilities, healthcare, transportation, insurance, household supplies, clothing, and groceries. Many people also include phone and Internet plans.
- Wants are things you like to spend money on, but don’t really have to. This may include streaming services, gym memberships, restaurant and delivery meals, expensive clothing items, jewelry, and name-brand products or luxury food items.
- Savings and debt may include car loans, student loans, and credit cards. It also includes savings such as an emergency fund and planning for retirement.
Choose the Right Joint Checking Account
Most couples have at least one joint account, which is typically a checking account. Many of our members also have a savings account either jointly, individually, or both. When considering joint accounts for couples, it’s important to find one that fits your needs.
Features Couples Should Look for in a Shared Account
A joint account should provide all the modern banking tools you need, such as online banking and a mobile banking app. At Neighbors, you’ll find our online banking and mobile app offer you the ability to check your balances, transfer funds, pay your bills, and make person-to-person payments using Zelle. As a local, community-focused credit union, we offer tailored savings solutions and advice.
We offer four checking account options, ranging from free checking with no balance requirements and no monthly fees, to an interest-bearing checking account for those who use direct deposit and keep a higher balance.
Our personal savings account has just a $1 opening deposit and minimum balance requirement. You can set up automatic transfers from your checking account to your savings account and monitor them through our online platform and mobile app. You can also earn more interest with our certificates of deposit (CDs) and Money Market Accounts, or save for retirement with our Individual Retirement Accounts (IRAs).
Build Savings Goals Together
One of the most important aspects of merging finances is to make sure your financial goals and spending choices are in sync so you can avoid any undo friction while planning for the day to day as well as the future.
Saving for Emergencies, Travel, and Future Milestones
Financial advisors recommend that every household have at least three to six months’ worth of living expenses set aside as an emergency fund, preferably in a savings account where you can earn interest and make withdrawals easily when necessary. If you’re raising a family, you may need an emergency fund that would stretch beyond six months, just to keep your family secure.
Of course, you’ll have other goals to consider. You may want to travel, save up for a home, and plan for retirement. That’s why it’s so important to have these conversations, to make sure you agree on your goals and how you’ll meet them.
Talk About Debt, Credit, and Long-Term Plans
As you figure out your budget and goals, you’ll need to set priorities on how to manage any existing or future debts, how they affect your long-term plans, and how you’ll split your needs between saving versus debt reduction. With any kind of financial planning, you’ll need to compare your credit limits. This isn’t about seeing who has the highest score; it’s an important part of taking stock of where you stand so you can achieve your goals.
You can check your credit history for free every week at AnnualCreditReport.com. It’s important to check your credit at least once per year, and especially before a major event. It’s also a good way to check for signs of fraud or identity theft. Any joint accounts, credit, or debts that you have together will affect both your credit scores, and your credit scores will impact your ability to qualify for loans.
Aligning Financial Priorities as a Team
Your financial goals should be specific. A goal of “saving more money” or “setting something aside every week” is unlikely to get you where you want to be. Try setting specific goals that you both can agree on. They should be ones you can both measure and adjust as needed. If you’re trying to eliminate debts, go over your budget and figure out how much you can afford to pay each month and where you may be able to cut back in certain areas. If you’re saving up for a major purchase, figure out what you need and how much you can afford to set aside each month towards that goal. You might break consider breaking your goals down into short-term, medium-term, and long-term priorities.
For example:
- A short-term goal could be saving up for your wedding, a honeymoon, and the costs of moving in together.
- A medium-term goal might be to pay off any student loans or high-interest debts, such as credit cards.
- A long-term goal would be something like buying a home, starting a family, and saving for retirement.
Schedule Regular Money Check-Ins to Keep You on Track
After you’ve combined households, you might be so busy adjusting to life changes that you lose track of your budget goals. That’s why it’s so important to reevaluate your budget and finances on a regular basis to keep yourself on track, to make sure you’re both in agreement and making progress on meeting your goals.
This doesn’t have to be a chore or a pain in the neck. See it as a chance to make sure you’re both pulling in the same direction. You can celebrate your progress and address any areas where you may be falling behind.
Plan for Unexpected Events
When making plans and putting together a budget, you’ll also need to figure out your strategy for major life events and how you’ll deal with them. This can reduce stress later on and make it easier for you to address these changes when they happen. These may include:
- A major financial change: Such as an inheritance, a bonus at work, or a job loss.
- Large expenses: Home repairs, replacing a car or a major appliance.
- Life events: The birth of a child, a serious illness, or someone passing away.
Make Banking Together Easier with Neighbors Credit Union
In addition to multiple checking accounts and savings account options, we also offer a variety of loans such as mortgages, home equity loans, lines of credit, vehicle loans, and personal loans, as well as Visa credit cards. As a local credit union serving the St. Louis area as well as the family members of our members, we offer you a personal approach to banking where we take the time to understand your needs and can help you find the right approach to saving, banking, and borrowing.
Contact Us about Joint Accounts in the St. Louis Area
If you need advice on merging finances, joint bank accounts for couples, or budgeting for newlyweds, we’re here to help with your moving-in-together finances, please contact us online, call us at 314-892-5400, or stop by your local branch location.