Finances are a major fault line in romantic relationships: According to Fidelity Investments, money is the biggest relationship challenge for one in four couples. And every couple that marries must confront the question of whether and how to combine finances. For this week’s Barron’s Advisor Big Q, we asked financial advisors for their professional opinion: Should newly married couples combine their finances?
Eric Herzog, wealth advisor, Prime Capital Financial: My advice to anyone getting married is to fully combine your finances. What I mean by that is all income sources in the household are going to flow to one account, ideally a joint checking account. All the bills get paid from that account, and all the automatic savings, loan payments, or anything like that get taken out of that account. It’s a little more traditional and old-school, but if marriage is in union, I think combining finances promotes more of a team mentality. If you have everything in one place, if you know where all your money sits at any point in time, it’s just easier as a couple to make decisions.
I’m almost 37 and my wife is 34, so we have friends who are on their second marriages or are getting married later in life. That is where I see a hybrid approach more often. That’s a little bit more of a “yours, mine, and ours” mentality. That typically might happen because they have had a career already. Maybe they have built assets of their own. Maybe one or both of them owned a house before the marriage, or they have been saving and investing quite a bit. Or if they got divorced, maybe they received some assets as part of the settlement. They might be a little protective over that. These couples are used to doing what they’re doing, and they just keep doing it. And then they find a way to combine finances. That might be a 50/50 split every month where they contribute to a joint account where they pay bills and cover expenses.
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