Consolidating Finances

28828798_sConsolidating Finances

After making your own money decisions for many years, pooling finances with someone else can be a source of anxiety. Perhaps even more troubling is the prospect of combining incomes and filing a joint tax return.

In this section, we outline key concerns and questions surrounding the consolidation of finances after marriage.

We can also give you some advice if you are not yet married but would like to think about consolidating finances and the implications of getting a Prenuptial Agreement.

New Financial Decisions
  • Who controls the finances?

In some couples, one person acts as the family accountant and is responsible for managing investments and expenses.

Other couples have the same arrangement but periodically switch the responsibility back and forth which helps both parties understand their finances and spreads the burden.

However you handle the day-to-day finances, both partners should:

      • Have access to all joint accounts and records.
      • Understand all investments.
      • Be aware of all joint expenditures, such as monthly bills.

Fortunately, online financial service providers have made it much easier to find, organize, and manage your finances. To learn more about online banking or investing services, see’s sections on Banking & Credit and Investing.

  • Should we have one checkbook or two?

Many couples wonder whether or not to pool all of their money into one joint account or to maintain separate checking and savings accounts.

    1. There are tradeoffs to each choice. Maintaining individual accounts will make it more difficult to track and reconcile, but they may help you preserve a feeling of financial independence. Other possibilities include:
      • Pooling the majority of money while maintaining small, separate checking accounts for personal expenses.
      • Having one joint family checking account, one family credit card (for household necessities such as home maintenance), and one credit card for each spouse. Personal allowance expenses can be made on the personal credit card and paid for through the joint checking account. As a result, you can keep track of expenses more easily.
  • What are the tax implications when I get married?

Depending on your income and tax bracket, a married couple filing jointly may owe more tax than they did when they were both single.

Why? Two working people who combine their incomes on one tax form are suddenly vaulted to a higher tax bracket than they occupied before. Consulting a tax planner in your first year of marriage is a good idea.

If you file a joint tax return, each spouse who signs the return is responsible for the entire amount of the tax liability. That means if you sign a tax return with your spouse without really understanding it, and if that tax return is incorrect and more tax is owed (not to mention the resulting penalties or fines), the IRS can come after you for the entire amount, not just half.

Even if you and your spouse have been long divorced, you are still liable for the joint returns filed during your marriage. Be careful never to sign a tax return that you do not understand. Ask questions, and make sure both you and your spouse understand and endorse your joint tax return. To learn more about taxes, go to’s Taxes section.

  • How do I protect my own credit after I get married?

From the moment you marry, your credit rating is joined to your spouse’s credit rating. You must be honest with your spouse about what debts and credit history you bring to the marriage, and you must expect full honesty in return.

If all the credit is in your spouse’s name, you may find yourself in a tough position if you ever get divorced or become a widow. To protect yourself and your ability to get credit in the future, keep at least one credit card in your name only and use it periodically.

Just as important as protecting your individual credit is protecting your joint credit. Getting married, living together, having a family–with so many immediate demands, it’s easy to accumulate credit card debt. But carrying a credit card balance, or worse, missing payments, will damage your ability to qualify for a home mortgage or auto loan.

Before you and your spouse begin to build your investment accounts, take the time to pay off those credit card bills. To learn more about the benefits of paying off credit card debt and strategies for paying it off quickly, see Building Your Credit.

  • What happens to my retirement account when I get married?

Depending on your work situation, your retirement funds will probably be held in an account that has only one name on it–yours. The same situation is probably true for your spouse’s retirement funds.

Non-retirement investment accounts are best held in both of your names as “joint tenants in common.” That way, should either one of you die, the other has easy access to the account.