Love and Money

Love and marriage go hand-in-hand. Love and money, not so much. According to a Money Magazine poll, 70% of married couples fight about money. Turns out it’s much easier to agree on what’s for dinner and which HBO series to watch next than what percentage of your combined annual income should go towards paying down debt.

On the plus side, the latest Census figures show that Americans are waiting longer than ever to tie the knot. The median age for most men to get married in 2016 was nearly 30 with women marrying later in life too. With so many couples starting careers before they settle down, you’d think that maturity would make talking about money easier. Not necessarily, according to Adam Furchner, a Portland psychologist and divorce mediator.

“You’d be amazed at how little people talk about money before they get married,” said Furchner. “No one wants to admit they’ve made mistakes, even though we all have. I do find older couples are a little more mature about it but the majority of couples I come into contact with don’t know much about their partner’s spending habits until they learn about it during the divorce proceedings.”

To Co-Mingle or Not to Co-Mingle?

Coming into a marriage, everyone has different experiences with money. Some grew up with a little and some grew up with a lot. Some are savers, some are spenders. Some crinkle up all the bills in their wallet and some fold each bill neatly. Different personalities can make managing money jointly a little tricky.

The most important thing to remember is to communicate. By communicating early and often, you and your spouse can settle on a money management approach that works best for you. Here’s a few to consider:

The Percentage Method

How it Works:

Couples that use the percentage method each contribute a corresponding percentage of their income to pay bills and family expenses. For example, if David earns $2000 per month and Jessica earns $4000 per month, David would pay 33% of the family’s bills and Jessica would pay 66%. The remaining money can remain in separate accounts or go into a joint account depending on personal preference.

Pros:

• Both partners are paying the bills but doing so at a level that’s comfortable for each.

• You’re sharing money but you can also keep a little for yourself on the side.

Cons:

• The higher earner might feel resentful over time that a higher % of their income is keeping the family afloat.

• You have to be fairly good at math to figure it all out.

“I know a couple that keeps their bank accounts separate but uses the percentage method to divide up the bills,” said Rene Gamboa, an Umpqua Bank client advisor. “One spouse pays the mortgage. The other pays all the utilities. It works perfectly for them.”

The Money Method

How it Works:

As a couple, you each contribute the same amount of money to a joint account each month to meet expenses, regardless of how much either of you make. So instead of contributing a percentage of your income, you each contribute $2000 per month. Any leftover money can be kept in separate or joint accounts.

Pros:

• Each person contributes equally so you’re completely equal partners when it comes to paying the bills.

• You’ll know exactly how much you’ll be contributing every month. No surprises regardless of income fluctuations.

Cons:

• The higher earner will have more ‘play money’ left over. This can cause friction if, for example, one of you wants to go on vacation but the other one can’t afford it.

The All-In Method

How it Works:

If marriage is about sharing, this method is about sharing it all: bank accounts, savings accounts, investment accounts, credit cards and debt.

Pros:

• When you combine all your assets, you feel like you’re one entity instead of two separate individuals. Some call this ‘love.’

Cons:

• If one person had a lot of money coming into the marriage and another had very little, it can create some friction. See: The Royal Wedding.

The Road to Financial Bliss

So what’s the right method for you and yours? Matt Spiegel is a 47-year-old sports radio personality in Chicago. He recently married and says he and his new bride –– who both were previously married – talked at great length about money before he put a ring on it.

“We decided to pool our money together with full openness,” said Spiegel. “Mine is hers and hers is mine. We’re combining checking and saving accounts. And it came with a pledge to be honest with each other. The goal is total transparency. No need to sneak around.”

“If you’re comfortable sharing everything, that’s ideal,” said Umpqua client advisor Letticia Laws. “For most married couples, I recommend a hybrid of joint and individual accounts. That way you have shared responsibilities with the joint account and can still save money for fun things you want to do, like buy your spouse a surprise gift, with money you’ve saved on your own.”

If you and your new spouse are looking to open a joint account, check out Umpqua’s Access Checking account. It’s an easy way to combine assets and get things off on the right foot. Click here to get started.