Merging your finances

When you get married, it’s not just your hearts that become one, but also your money.

– Video supplied by BrightRock

Welcome to the Change Exchange, where we’re discussing rings and cha-ching!

Even if you and your spouse are one of those financially independent couples where ‘his is his’ and ‘hers is hers’, when you live together, raise children together and hopefully retire together, there is an inevitable merging of finances.

On a really practical, day-to-day level, you need to figure out how you are going to pay for all those shared expenses – should you have a joint bank account, a household credit card or just keep a running tab?

The joint bank account

Some couples may consider a joint bank account. While this may seem the easiest, most practical solution, it can be an administrative nightmare should a spouse die, as there is no such thing as a “joint” account. In South Africa there is only one option, with a main account holder whose spouse has signing rights. This means that if the main account holder dies, the account is frozen, along with all the money to pay the bills.

The running tab

Some couples work with the “running tab”. If you decide to keep your finances separate, then you need to have an arrangement as part of your monthly budget as to who covers which expenses. For example, one spouse could pay the mortgage/rent and household insurance whilst the other pays for groceries and utility bills. This arrangement only really works if you have sat down and worked out a proper budget. You need to know realistically what groceries cost each month and what you expect to pay for electricity and water. It is not uncommon to hear arguments between spouses about their expensive food/drink tastes!

The household bank account

Then there is the household bank account. In many cases, when a couple gets married, they already have their own bank accounts along with a relationship with their bank and their own credit history. So it makes sense to keep banking the way you did, but then form a household bank account where each spouse deposits funds at the beginning of the month.

The household credit card

Finally, you could use a joint credit card, which would save on bank fees, but please ‒ remember to put the money in at the beginning of the month, and to keep a low credit facility.

Related: How to talk about money with your partner