You’re newly wedded—and suddenly, so are your finances. While some married couples decide to merge their money completely, this comes with the risk of blow-ups over the validity of personal expenses, from a new lipstick to a new convertible. If you both work, deciding to share “joint” expenses seems obvious. But how do you decide what’s a personal expense and what’s shared? And how do you budget for each one?
Many couples find it best to put an agreed-upon percentage of their income—instead of a dollar amount—into their shared accounts. First, do some math to decide what expenses are shared and how much money you’ll each need to contribute to cover them: kid’s clothing? Shared dinners and movie nights? Expensive personal necessities like glasses and contacts? Short-term savings for vacations and entertainment? How much money can you afford to put into your 401(k), and still have some left over for personal expenses? Keep in mind that any money earned during a marriage can be considered shared property in a divorce. Express and record your expectations and concerns. Don’t expect your finances to look like any other couple’s—this is about what works for you.
Consider a joint credit card for your day-to-day shared expenses, like groceries, gas, kid supplies like diapers, and toiletries (although you might have to argue over that $45 bottle of eye cream). If, for example, your husband has a low credit score or a history of unemployment, it may be best to apply under your name only. You can make your husband an authorized user instead of applying jointly. For the first few months, go through your statements carefully and discuss any items that you think should have been personal expenses. You can learn more about the pros and cons of joint accounts here.
Since you’ll be using your card for everyday expenses, make sure to get a card that rewards you for purchasing those items.
If you and your spouse own a home together, one of your biggest shared expenses is the mortgage. But just because you share the payments doesn’t mean both your names have to be on the paperwork. If one person is approved for the mortgage on their own, it allows their spouse’s credit to be unaffected by the debt of the mortgage. This allows your family to have more flexible finances in the future. It also protects you as a couple from the credit-ruining possibility of foreclosure.
Personal expenses will prove to be a little trickier. If you’re an actress, is your $250 haircut a shared expense? If you want a new car—but don’t need one—do you save up by yourself or together? How about that suit for a big meeting? And is that new iPad coming out already?
Since your spouse won’t hold you responsible for the purchases made with your personal account, you’ll have to budget carefully and separately for all those girls’ nights out and poker games. Try not to judge or argue about a purchase bought with personal funds: you know they’re never going to use that stupid kayak, but that’s the whole point of personal funds.
As with all aspects of marriage, the best way to manage shared and personal finances is to maintain open communication with your spouse about the issue. Spend time making the rules, but don’t be afraid to change them. Having children, buying a house, getting a new job, and many other life events can significantly affect your finances—by being flexible, generous, and honest, you can stop if from affecting anything else.