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
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
- Have access to all joint accounts and records.
- Understand all investments.
- Be aware of all joint expenditures, such as monthly
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 MsMoney.com's sections on Banking
& Credit and Investing.
Should we have one checkbook or two?
couples wonder whether or not to pool all of their money into
one joint account or to maintain separate checking and savings
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:
What are the tax implications when I get
- 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.
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 MsMoney.com's Taxes
How do I protect my own credit after I
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
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