We’re Newlyweds! Why should we combine our finances?

*Sorry for any errors in grammar as this was generated using AI

Welcome to the MoneyPig podcast brought to you by Goodwin Investment Advisory where our mission is to lead people to financial peace, independence and generosity. I’m your host Reed Trigo, and if you’re enjoying the show, please rate and review our show wherever you get your podcasts and if you have a question you want us to address, you can email us at moneypig@goodwininvestment.com. Today on the show we are joined by financial advisor Ray Brown for a discussion about combining finances as a newly married couple. Ray, I’m so excited to have you here.

Hey, thanks for having me. It’s great to be back. It’s always a fun time.

It is, it is. So this is a great know, when I talk to you about topics it’s usually about something that’s happened to you and so here we are. This didn’t happen to you. This is something that you created in your life. But you got married.

There we go. Yeah, recently married and so yeah, we’re getting to jump through all these fun things, know, organizing, combining finances and yeah, this was a recent discussion topic in our house and so what a perfect time to chat through it.

Well congratulations.

Thank you. Thank you so much.

You and Lindsay, awesome couple, very excited for you. May you have a happy and long AW marriage.

Thank you. Appreciate that. We’re off to a great start.

That’s good, that’s good. You’re like three weeks in.

We got it all figured out.

Yeah. So we figured since you have it all figured out with all these hours of experience, how do we combine finances as a newly married couple? You and I were talking here before the show and we kind of discovered that you and I have pretty, I don’t know, strong opinions, but we definitely have a perspective that we share. We believe it’s better to combine finances, especially as a newlywed couple. We realize that there are people out there, they get up in age, my age, and they’re on maybe a second marriage and there are complications with that because they’re sometimes divorced and somebody’s got to pay for college and there’s a lot of different law.

More complicated.

It gets way more complicated. So this is really for the newly married couple, generally first marriage young and we’re seeing some data out there that’s really interesting about combining finances.

Yeah, so much of this kind of just trying to keep opinions aside. I mean, of course you and I have the similar opinion, but then I’ve recently just heard conversation from people within my own family, friends, distant relatives, all these folks are talking about kind of probing me a little bit and asking like, well, what are you all going to do? The first question is, whose house are you moving into? It’s going to be mine. Okay. And then what are you guys doing about getting all up in our business and just asking these kinds of questions? It’s like, yeah, we’re going to combine finances. And a lot of friends have said, like, oh, wow, me and so. We could never do that. That would just cause so many arguments and disagreements. We’d be fighting all the time.

And it just took me back. I’m like, in my head, I was expecting I just assumed the whole world did this. You get married. What’s? The old marriage vows, it’s like, until death do his part. Back in the day, you would hear, like, unto thee I pledge all of my possessions, I believe, right? Like my assets or possessions, something like that. But you’re giving into each other, you’re marrying your bank accounts. But what caught my eye was this bank rate study. And so they did. It was a recent study that said 43% of married couples have combined their money according to survey data. That’s less than half of the people that are married, which means you become one, have separate bank accounts.

That surprises me too. Yeah.

All right, so digging into it came then across different piece of data because again, we’re looking for data points like what you and I think no one cares.

Well, some people do.

Well, maybe for you. I’m just kidding. But another study, it was a recent study, this was done at the end of last year, so at the end of 2022, it was Cornell research. The study was called Pooling Finances and Relationship Satisfaction. I’m going to skim a little bit of this here, but we’ve got the paper here on the desk. But the study says they find out whether or not couples combine their money can and will make or break a relationship, which I was like, okay, this is supporting my argument here. Let’s dig into it. Hopefully it supports my feelings and what I thought, but it says that we did see that couples who pull their finances are less likely to break up that’s a harsh word to use, break up than couples who keep their finances separate.

Maybe it’s because banks make it so difficult to change. They’re like, I’d rather just stay with the bank and stay married. I don’t know.

And I think we could talk about that. We could talk about that too. What are some reasons on people’s mind? A lot of folks have excuses or there is a reason, like you mentioned from a prior marriage or this or that. There’s lots of reasons, but I’ve also got some creative solutions, and so I think we can offer those as well. But one more interesting statistic here from this recent study. It says that boomers are the most likely to have only joint accounts. That’s at 49%, Gen Xers goes down a little bit, 48%, and then millennials, 31%.

Big drop off.

Yeah, seems to be a generational trend there. The younger folks are less likely to have that mindset that the older folks do. They’re bound. You’re getting married, so let’s marry our bank accounts.

Interesting. Good. Anything else in that particular study?

I don’t think so. That’s kind of mentioned here is they’re reinforcing the terms and some of the pronouns that folks use. Again, this dove into some there’s some very deep data points. I don’t want to get into all of this, but I’m just kind of giving you the summary of this. But it’s couples that openly talk about money are more likely to be on the same page and are better able to achieve their financial goals. The general consensus know, you’re talking about money regularly, and it is important. And there’s just a different use of pronouns, which is where you start. I’ve heard this before. I think Dave Ramsey would say, like, you got to stop speaking English and start talking French. It’s no longer my money or me. It’s the we. He’s like, you’re speaking French. It’s we.

So you’re combining those, and part of this study backs that up as well. It’s saying, we’ve noticed a relationship change with pronouns we, us, and our. And then fewer pronouns such as I and then the affiliation words around the relationship, such as agree, connect, friend, kindness, listen, peace. All these terms that sound so great, and it’s like, all revolving around the point or the concept of combining money.

Yeah. Wow. Okay. Super interesting. And I think about some of the complications of not combining money, and I don’t want to make too much light of this, but if you go out to dinner, who pays? I guess you take turns.

Yeah. And that’s what, to me, I don’t understand the perhaps we start with the why do folks not lead with that? Like, why is it so? There was an industry firm that said they did a separate report. There’s other studies that reported couples who keep their finances separate say that they feel they are able to maintain independence and self identity within that relationship.

Okay.

So depending on which partner makes more money than the other, that information, I mean, that would cause constrain the relationship is my take on that.

Me too.

How do you decide you’re making this much? I’m making this much. So we’re saving for my retirement and your retirement, instead of we collectively as a household, make X amount of money, and so therefore, let’s say 15% of that number for retirement.

Yeah, that’s exactly right. And I think about when I first got married, my wife made more than I did. I hadn’t quite settled into a career yet, let’s say, and she made more than I did until we had a child and she stopped working a job.

Right.

And so then I made more.

There we go.

But I guess it’s a trade off. I don’t know.

Yeah. And working inside the home is truly it’s a full time job, but it’s not producing an income. But that’s okay, because it’s still a very valuable it’s an insurable position inside the home.

Absolutely. Okay. Well, good, we got that. How about some of the ways? What have you found as far as combining your incomes, your bank accounts? What are some of the arts around that?

Yeah, you know what? I think maybe that’s also another thing of why it’s so daunting or why people don’t do this. Because, you’re know, depending on when you’re pulling the trigger and getting married, it’s like you’ve got your credit cards, you’ve got your banks, you’ve got your different loans and debts. And so now you’re, oh, gosh, like, what do we do? And so I think Lindsay and I recently sat down and we’ve gone through this process of having this thought, digging deep with some of the thoughts around how are we going to execute. So to answer your question, Reed, I think it’s really just about designing the plan. You’re going to choose to have one bank account. It’s a joint account. You’re each going to choose to have goals. Again, you’ve married.

And so the idea is, like, you’ve come together and you are now one. That’s the whole thing about a marriage ceremony. And regardless of who makes more money at the end of the day so let’s just entertain this for a second. You keep the assets separate. That’s how they’ve been. We’ve got our separate banks, our separate stuff. Say you go get divorced, none of it’s separate anymore. What divorce attorney is going to say or what divorce judge is going to say, oh, that’s his retirement over there and his is this and yours? No. They’re looking at all of your assets together. So why aren’t you? Yeah, hate to bring up that word, to put it around that position, but I just think that it’s I think there’s a little bit of a perception with some folks that might be viewing this a different way.

And again, it’s our opinions here, but what I’m most intrigued by is the research that backs it up. So why does any of this matter?

That’s right. Looking at it as a scientist, not.

A preacher, truly some data science here behind it. And so for us, though, we kind of began with that. How are we going to combine? And it’s just choosing one bank account. Everything’s going to hit this one bank account. The credit card, or if you use an American Express or a charge card, it’s like everything is going through this now account. And all of these hit our budget. And so whether you put it on your card or I put it on mine, it’s still going to one universal budget, and we’re still coding that chips and salsa purchase to know it’s still coming out of the same line item regardless of whose card it goes on. It’s tied to the same central budget where we budget all of our money as a collective household.

Well, I think it’s fun to have a joint account and have paychecks from both of us going into the same one. If it was just me, I’d be like, that was kind of fine, but now it’s both of them. That’s more money. Yeah, there’s more money to budget because we’re nerds. But, yeah, it’s kind of money.

And then also your joint goals. And so it’s like, gosh, if you’re doing home repairs, what if you want to paint a room? Like, well, how do we decide who’s paying for that? Or, oh, you pay the mortgage, and I’ll pay for all the groceries. It just seems like it would be way too complicated to track something like that.

All right, good. And you’ve talked about and my wife and I do this too, having fun, kind of making budgeting fun, which wow, of all the things.

It’s not really what you want to do on a Saturday, but it can certainly be fun. What do you guys do?

Well, we set this up a few years ago. Not terribly long, honestly, but we do Thursday night. Thursday afternoon, we have a budget meeting, and it’s usually before we go to Trivia because we’re empty nesters.

That’s so fun.

Generally, it’s right before we go, so that’s kind of our reward. We get to go to Trivia if we’ve checked in on our activities and our budget. Just check in.

I like that. And it lets you know where you’re at before the weekend rolls up. I think Thursday is a great day to do it. Yeah, you do it once a week.

Once a week.

Okay.

Yeah, we’ll miss one every once in a while. Look, nobody’s perfect at anything, so people hear, like, oh, you’re budgeting, and you’re budgeting to zero, and you’re planning. Look, people mess it up all the time, and we get out of whack, and we have to reorder things. So that’s how that works.

That’s all fun. And part of the process. Something I told Lindsay were working through this weekend, and again, it’s for our first time, so I’m kind of opening her perspectives to how she’s been doing things. And, hey, I mean, it’s also just a big of an eye opener for me because I’ve been doing things my way, and it’s so far up, so now it’s been my budget, so what do I want to do with my money now? It’s like, okay, you got to kind of step back a beat and say, this is now ours. What do we prioritize? And are we okay with spending this much money in this category that we’ve probably overextended in, and it’s a want and not a need, and we’ve got other things we’d probably rather be pushing this towards, but do we love this?

Do we prioritize this? And can we justify and just having those kind of conversations? But it should never feel restrictive, and I think automatically by default. I know you talked about this in prior episodes. There was a great one on budgeting through YNAB, which is what we use and what I highly recommend, but making it so that you’ve got the paintbrush or the magic wand or whatever you want to call it, this is not by any means a restrictive thing. It is truly like a flexibility and permission to go and spend. You’ve put money into certain categories, home improvement, whatever it may be, eating out. And it’s like, if the money is there, you go do it.

Yeah. My wife was great at teaching me that. I was like, well, let’s paint this room. And she’s like, well, good. We saved up $400 for paint so you can go buy the paint and paint it. I’m like, well, I’m sure I can find the paint cheaper. Maybe I can get by with $300. And she’d be like, we budgeted $400 for this. Would you go get the good paint?

Just go get it done.

Get the good paint.

That’s great.

That’s how we do things anyway.

Otherwise, if you’re looking at a bank account, it’s like, I have no idea what of this has already in our heads been allocated for car insurance or home insurance is coming due. There’s so many ways to it’s impossible to know all the expenses in your head. Budget helps, and it can be fun. I think what we’re going to do, Reed, is something similar. We got to agree on a date still that we’re going to do it, but make it recurring. Put it on the calendar so it’s an agreed on thing and let’s have a glass of wine. Let’s make it fun. There’s jazz music on in the background, and we’re going to have nothing else to do. It’s not like we’re doing this because we have to.

We’re coming together in the office because we want to do it, because it’s the most important thing to start our week. And we’re going to do this and we’re going to design. Where is the next paycheck going to take us and why?

And I think it’s really common in couples that there’s one member who really thinks we should really get this all together. They’re the rows and columns person. We should figure all this out. We goals team. In our case, team Trigo. And then there’s the other person who’s a little more fun or know. And it’s like, oh, I don’t really want to do that. Well, that person that’s serious about it has got to make it interesting for the one who doesn’t find this interesting. And Christy did a great job of that with me. She was like, hey, you’re the budget. Yeah. She’s, like, had to talk me into sitting she I know I’m a financial advisor and she had to talk me into sitting down. But she would say, hey, but we’re going to budget for our vacation in January.

We’re going to set aside money for those things. It’s not like I’m a child, but that worked.

And I feel like you get on board with it quick. Once you see that, like, okay, this is my whatever category. And so then now you’re looking forward to you’re stepping up to the plate at the next meeting and pushing for a little of that money that’s come in to go into that for that little envelope for the future.

That’s right.

We always talk about having a personal line item in the budget as well. This is what’s, like, we call it like a no Questions asked fund. And you put a couple hundred whatever your number is going to be in there each week. And that is truly like, anything can hit your account, and you can code it to that, and there’s no questions asked. It’s just to move on. And that’s your fund money. You’re walking around money.

We call it our little slush funds. There’s a Reed’s money and Christy’s money.

There. You go and spend it. Go blow it. You can take it out as cash if you want to buy a know for the other a lot of times we’ll hear that. So jumping back to like, well, I don’t want to buy because then I would never be able to surprise her. It’s like, that’s the reason, because I can come up with three different alternatives for that.

I used that one. Yeah, I did. But now I have an account at a different bank. So literally, she doesn’t see it automatically. She sees Amazon purchases, which that’s no.

Yeah, exactly. So we’ve got that going. We’re big fans of having that the no Questions Asked fund. And then also just doing that review together of your subscriptions. Once you bring everything together, you’re able to see what’s actually hitting this account. Are we both paying for Amazon Prime accounts? That’s ridiculous. But, you know, you pay for it once a year. You forgot who’s got the Costco membership, who’s got this, who’s doing you’re putting gas in your vehicles. It’s just a lot going on. And so I think coming together as one, it’s like were blown away this weekend, and when we started kind of going through expenses and thinking, like, what is this? And had to do a little research of, like, what is this? 499 to Prime Video? We don’t have prime.

What is and so you’ve got to do a little homework to, oh, it turns out that’s something we’ve agreed to subscribe to and so kind of tracking down, okay, well, if you’re paying for that, then I’m going to cancel mine, and we’re going to it’s great.

You probably found money, a little cleanup.

A little bit of cleanup.

That’s great. That’s great. What about paying off debt if you have it? How do couples do that when they bring it together? Let’s say they come in and she owns her car. He still owes on his car. What do you think happens? I think that you inherit the debt, becomes one.

Yeah. You have become one. And so therefore, your assets again, going back to those original vows, it’s your assets are coming together. You’re pledged to each other. And I am of the opinion that you’re now working as a team to eliminate the other’s debts in the same sense that if one person owned a house before the other comes into the marriage, it’s now both of your house. You can’t say, this is my house. You’re not roommates. And so your lives are one, and so therefore, your debts and your assets are one. And so where are we at? Let’s draw the line and let’s start tackling that debt together as a team. Because the quicker you both get it cleaned up, the quicker you can move on to those other fun savings and priorities and spending goals.

Vacations.

Vacations. That’s why we’re doing this.

I know we put so much priority on vacations in our family, but that’s what we get excited to budget for.

Yes.

Love going and traveling and seeing the.

World and you’re getting rid of the debt so that we always circle back to the so that the why. Why does any of this stuff matter at the end of the day? It’s because we’ve got goals and we’ve got a path that we’re looking at and where we want to go in life, and we need this to help us get there. Right. The gears are turning.

Exactly. So what else do we have?

I think that I have hit my high points. I just wanted to share again. I just was blown away by the data and the statistics there and all the different sources. I mean, we’ve got the Cornell research. NPR has come in on this bankrate. There’s other leading firms. I didn’t realize how much research had been done in this know, I’d always just know some things through Dave Ramsey this and that. And of course I agree with that logic, but now I’m just intrigued by the validation of like, okay, previously these were all just know whether you’re looking back to biblical concepts and vows and marriage and joining one life. Okay.

But now when there’s actual hard data points that are saying that happiness and these emotions are all tied to how you operate as a relationship and as one, I’m like, okay, I’ve gotten that validation of these opinions are in line with the lifestyle that I want and what I expect.

Yeah, I think that’s a great point. And here’s the thing. Probably should have said this up front disclaimer, but in any case, when we look at a situation like we can look from a distance and we say, oh, people ought to combine their finances, especially young newlyweds combine your finances, it just makes sense to us. Right, right. But in reality, when you go sit down across the table from a couple and they’re a young newly married, they will have a story that makes sense to them. And when they tell us as advisors, here’s why we’re doing this 90% of the time. I sit there and go, yes, I understand that. I get it. I get that makes sense. Okay, I see why you did it, because they’re making a decision at the time that makes the best sense to them at the time.

And inevitably, I’m like, yeah, okay, I do get that. So it’s always like, the closer you get to a problem, the more complex it became, rather than just being able to stand back and go, you should do this.

Right? Because, again, the stories are personal and real, and if you’ve got prior experiences or you’ve had prior issues or you’re expecting one partner to be the same as someone prior and it’s just like, everyone is so different in the way our minds work. I’m a huge nerd when it comes to this. Lindsay, not so much. It sounds like you and Christy have differences in terms of just personality traits that make this more engaging. But I guess the big takeaway for me is just that encouragement to look at your bank account as if it’s married. A household is operating that I just think that there’s no harm in leading that path of, like, how do you want your relationship to function? What do you guys want to do? You are a team.

Teams use the same you look at how a sports team functions and it’s like you’re using the same stuff. You’re moving in the right direction, your vision is aligned. And I just think that keeping assets separate, it’s like you’re now roommates, your lives are separate. You’re not on the same page. You don’t know truly what one person is spending on certain things versus the other, and it just gets a lot more messy. And so look at it, make it fun. Have those budget meetings, find ways. We talked about YNAB earlier, and you talked about it just a couple of weeks ago. The budgeting software. There’s a lot of great tutorials and content that YNAB produces that gives great encouragement and advice for couples that are budgeting and how to do it effectively and how to make it fun.

Kind of tearing away the stigmas of what you can and can’t do and the dread that comes around talking about budgets.

Yeah. Awesome.

There we go.

Hey, Ray, thanks so much for being with us today.

Thanks for having me. Always great.

Yeah. And as financial advisors, we manage and rebalance portfolios, but the unique value we offer is that we work to understand our clients individual goals so we can have these types of planning conversations. And if you’re the kind of people who don’t combine your budgets, don’t worry, we’re not judgy. We’re going to work with your situation, whatever it is, because every one of these conversations we have are so personal and unique to each individual. Thanks again for joining us. We will see you all next time.

The Money Picked Podcast is hosted by Reed Trigo, a financial advisor at Goodwin Investment Advisory. This podcast is intended to share information and perspectives, but should not be interpreted as legal, financial or tax advice. The opinions shared by participants are not necessarily endorsed by the company. Goodwin Investment Advisory is regulated by the SEC, and the company operates in compliance with applicable securities laws and regulations.