The impossible happened – the logical, cool nerd fell in love and got married!
The wedding and honeymoon were magical. Everything I had envisioned since I was a little boy (We returned from our honeymoon a few days back and I’m currently getting back in the swing of things. So if you left a comment, used the contact box, or replied to an email (if you sign up for email updates, you’ll receive 1-2 emails a week with juicy details), I’ll get back to you soon.
Marriage and Finances
This is a financial blog about rental properties, so let’s examine marriage through that lens.
Finances can be a huge strain on a relationship – it might even be the #1 cause for divorce. Each individual has their own ideas on money that might not be discussed. I suppose it all comes back to communication.
I am naturally a big saver. I don’t buy many things, even clothes – “I want for nothing” is a Brian-ism. But I do spend big on travel.
Without defining my approach and my wife defining her approach, we would likely just keep our previous behavior, and at the same time expect the other person to behave the same way. That is a recipe for disaster.
Rather than me just saving everything because I don’t spend it, I am going to have to communicate. We are going to have to set goals together and modify our behaviors to reach those goals.
Gen Y Finance Guy has a 50% savings rate goal to reach financial independence quickly. I don’t think we will be quite so ambitious, but simply having a set number and tracking it will help.
Now that I’m married, I feel greater responsibility in this area. I have heard it is a much bigger kick in the pants when you have your first child, but suddenly my decisions don’t just affect me.
Combining Finances – What’s the Right Way?
There are several options for how to combine finances once you are married. Or even not combine them at all.
You can have a joint checking account but keep open personal accounts with an allowance deposit each month. You can have joint bank accounts but personal credit cards. You can share absolutely everything. You can file taxes jointly or separately.
We haven’t decided exactly what we want to do here yet. We already have systems in place for rent and sharing household expenses (I handle most bills, she handles most grocery and household shopping). We already have a joint credit card we have been using for wedding and honeymoon expenses (which is a whole nother discussion).
It will probably stay this way until all the name change paperwork is complete. Then whatever we decide, it will be close to combining everything since we are on the same team.
How Does this Affect Rental Property Investing?
There are a lot of questions I don’t know the answer to yet.
How will combining finances affect our ability to get investment mortgages? Will our credit score be affected? Will debts held in our individual name matter for debt-to-income ratio calculations?
How will filing taxes jointly change our taxes? I am self-employed so set aside money each month to pay quarterly estimated taxes, then usually owe a lot more in April.
How will marriage affect our mortgage sequencing? Right now a conventional loan on the first 4 investment properties are 20% down and 25% down for loans 5 through 10. Should we try to put some properties in my wife’s name? I know some investors do this.
I tend to delay learning details like this, waiting until it is actually time to act to decide. But some of these might change the strategy or how we set things up, so I will start learning now. If you have any insight, please leave a comment!
Give me some tips – how do you make sure this communication happens? Is there a regular time you sit down and review finances and decisions together?
Congratulations! I’ll bet your in-laws are really cool!
Absolutely. The father of the bride really showed up the groom during the first dances.
Congrats! We are getting married too very very soon!!! In terms of finances, we use the same technique (separate bank accounts but we share the expenses, split the payments)… We do share the same views on finance and savings and I’m sure you and your wife will do just fine! Good job!
Congrats. I can speak from experience – you are going to love being married!
Are you going to keep the separate bank accounts when you are married or do you have a plan for how you are going to combine everything?
Congrats, Brian! Very happy for you and your wife.
I’ve got a similar post about relationships and money coming out soon. You touch on some great points here!
In answer to your question, my wife and I typically sit down once per quarter to go over the finances. Sometimes she falls asleep, but I keep reminding her that it’s going to be her primary responsibility if anything ever happens to me (God forbid).
Thank you, thank you. We couldn’t be more excited!
That is a great point, it might be her responsibility one day. I suppose that really comes into play when kids are in the picture. Thanks for the tip.
Congratulations Brian! Exciting times. My wife and I have a primary joint account (checking/savings) where we each contribute a sizable amount each pay period. This account handles all the necessary expenses (rent, food, car, etc) we have. We also have our own individual accounts that we maintain, mostly because we each have our own side businesses that we run. I fund my real estate investments and she has her side business too. Though another reason, is that she doesn’t like me questioning how often she buys a new purse or pair of shoes lol! It’s cliche, but very true. A happy wife is a happy life.
Ha, I love that quote! That is cool to hear you both have your own side businesses you invest in. I bet yours is a little more capital intensive though?
Congrats! I got married 8 months ago in December and my wife and I haven’t figured out many of these things yet. We kind of have a structure in mind through conversations.
Since we got married before 2015 was over, we were able to file taxes jointly and received a pretty nice refund.
Congrats to you as well! Very exciting times
As someone who has been (unmarried) with the same woman, I cannot say it was a good idea financially to get married.
Taxes are generally better single. Roth IRA limits, etc. Two single people have a higher limit.
Unmarried, you are two entities and transfer property back and forth if you have to. If one person becomes unemployed, that person can get low income benefits being single, but household income counts as a married couple. Healthcare benefits are one.
Congratulations anyway!!!
Interesting, different than the standard advice. Especially taxes. Usually you hear they are better joint – why do you say otherwise? I believe you have the option whether you want to file jointly or not right?
Congratulations!
Money is always difficult at the start of a marriage. We had to merge our “stuff” which led to hurt feelings when one person had to get rid of their gender-focused things. (This worked both ways, I’m not trying to be cryptic.)
We started with a joint account that common expenses got paid out of… housing, food, utilities, etc. (We had separate cars, so we continued to pay those loans off separately.)
We contributed a weighted percentage of our income to the joint account. So if my wife made 55% of our income and I made 45%, she’d pay a slightly higher percentage into the joint account. She’s also get more discretionary money.
As we round our 10th year of marriage, we’ve combined a lot more. Having kids, buying new cars, new houses, and things like that make it a necessity. I like to call it a slow merge of finances. We still have our own pools of money, but it is completely transparent and we review it monthly when I pull together our net worth.
Thank you! You mean you didn’t get to keep all your bachelor furniture and decorations? I just mentally note ideas in hopes I have a “man cave” one day…
That’s interesting that you guys did it more gradually. The slow merge probably wasn’t as big of a shock.