How to combine finances with your spouse? Recently married/early30s

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ChiLawyer
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How to combine finances with your spouse? Recently married/early30s

Post by ChiLawyer »

Reviving this thread for a moment. DW and I recently got legally married. We've postponed the "big" religious wedding due to COVID. I'm 30, she's 28. I have about a $235K NW split between retirement and taxable accounts (64% VTSAX, 16% VFWAX, 6% VBTLX, 14% cash/VMFXX for emergency + "big" wedding expenses). I have no debt and have about a $250K pretax income. DW has probably $10K NW, $25K income and $10Kish of student loans being paid by her parents.

I want to manage our finances in a way that builds trust and a collective future, but am rightfully concerned about protecting my "nest egg" given our income and NW disparities. Thoughts on how to best handle our accounts going forward?
wilked
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Re: How to combine finances with your spouse? Recently married/early30s

Post by wilked »

ChiLawyer wrote: Fri Sep 25, 2020 1:35 pm Reviving this thread for a moment. DW and I recently got legally married. We've postponed the "big" religious wedding due to COVID. I'm 30, she's 28. I have about a $235K NW split between retirement and taxable accounts (64% VTSAX, 16% VFWAX, 6% VBTLX, 14% cash/VMFXX for emergency + "big" wedding expenses). I have no debt and have about a $250K pretax income. DW has probably $10K NW, $25K income and $10Kish of student loans being paid by her parents.

I want to manage our finances in a way that builds trust and a collective future, but am rightfully concerned about protecting my "nest egg" given our income and NW disparities. Thoughts on how to best handle our accounts going forward?
If you were concerned why did you not get a prenup?
Outer Marker
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Outer Marker »

ChiLawyer wrote: Fri Sep 25, 2020 1:35 pm Thoughts on how to best handle our accounts going forward?
A post-nuptial agreement.
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ChiLawyer
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Re: How to combine finances with your spouse? Recently married/early30s

Post by ChiLawyer »

There were at number of reasons. At its core, neither of us comes from generational-sized wealth and she is already anxious and self-conscious about our income disparity. I decided it’s easier for me to not co-mingle premarital assets and set those aside (we are opening all new accounts post-marriage) than it would be to do the emotional labor of a prenup conversation during the added stress of wedding reschedulings and a global pandemic.
mptfan
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Re: How to combine finances with your spouse? Recently married/early30s

Post by mptfan »

ChiLawyer wrote: Fri Sep 25, 2020 1:55 pmAt its core, neither of us comes from generational-sized wealth
Most people who get pre-nups do not come from "generational-sized wealth."
terran
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Re: How to combine finances with your spouse? Recently married/early30s

Post by terran »

If you're not willing to create a formal pre- or post- nup (and maybe even if you are) I think you'll need to come to terms with the idea that everything you own is now half hers.
tim1999
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Re: How to combine finances with your spouse? Recently married/early30s

Post by tim1999 »

Outer Marker wrote: Fri Sep 25, 2020 1:50 pm
ChiLawyer wrote: Fri Sep 25, 2020 1:35 pm Thoughts on how to best handle our accounts going forward?
A post-nuptial agreement.
Yep. He can still protect his taxable accounts, provided he doesn't later co-mingle them, and can probably at least protect the current value of the retirement accounts. In many states it is too late to have the spouse waive alimony, that has to be done with a prenup. Given the income disparity, this is probably where you would get shaken down in a divorce. In any event you would need to talk to a family law attorney in your state.
mptfan
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Re: How to combine finances with your spouse? Recently married/early30s

Post by mptfan »

tim1999 wrote: Fri Sep 25, 2020 2:10 pmIn many states it is too late to have the spouse waive alimony, that has to be done with a prenup. Given the income disparity, this is probably where you would get shaken down in a divorce.
I can't speak for "many states," but in my state the marriage would have to be a long term marriage, i.e. 17 years or longer, or else there is either no presumption in favor of alimony or a presumption of no alimony in the case of shorter marriages, i.e. 7 years or less.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Outer Marker »

ChiLawyer wrote: Fri Sep 25, 2020 1:55 pm There were at number of reasons. At its core, neither of us comes from generational-sized wealth and she is already anxious and self-conscious about our income disparity. I decided it’s easier for me to not co-mingle premarital assets and set those aside (we are opening all new accounts post-marriage) than it would be to do the emotional labor of a prenup conversation during the added stress of wedding reschedulings and a global pandemic.
Your current net worth is less than your annual income. IMHO that's such a small amount, its not worth worrying about and sends the wrong signal. Either go all in with commingling or get a post-nup. The real damage is if you split 10 or 20 years down the line and have amassed sizable net worth that was attributable to you. You give away half of all that, and your income disparity remains a permanent liability in the form of alimony in many jurisdictions after a long marriage. Its a sad fact that upwards of 50% of marriages fail and in excess of 80% of divorce filings are initiated by the wife. A suprizing number of marriages end very late term. The only way to protect yourself is with a post-nup at this stage, which is basically pre-negotiating the divorce. And hoping it doesn't happen. If you have a sizable inheritance coming, you can structure that to flow into a trust and keep it out of possible divorce proceedings.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Flyer24 »

OP bumped an old thread, so I split it into a new topic. This will focus on his own situation.
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SmileyFace
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Re: How to combine finances with your spouse? Recently married/early30s

Post by SmileyFace »

I think it either has to be full-faith comingling or a prenup. Why something in between?
I am for the former.
My spouse was in the red when we got together (WITH credit card debt).
I decided I was all in; paid off her debt; we comingled everything; 28 years later still happily married. Of course divorcees will come in with an unfortunate opposite experience. At some point you might also be like me - have kids - look at her income being 1/10th of yours and wonder why she is working when it will simply meet the day-care bills - you will both decide that it best to have her stay home with the kids and never look back. She will become a great cook; interior decorator; gardener; ..as the kids get older and she has more time she will start volunteer work at the local food bank and animal shelter - and so on....
atlgenxennial
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Re: How to combine finances with your spouse? Recently married/early30s

Post by atlgenxennial »

Half is hers. That's what marriage is. Should have signed a pre-nup, or not gotten married.

It's that simple to me.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by FelixTheCat »

My story: I had a premarital house which I commingled in the family trust. I lost 1/2 of the value of the premarital property upon divorce.

My suggestion: Do not commingle your premarital accounts/property. Keep your premarital accounts in your name and spend from them as you see fit.

Open new accounts in both of your names funded with assets made from the date of marriage.
Felix is a wonderful, wonderful cat.
Whatyear?
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Whatyear? »

Come to terms with the fact that everything is jointly owned. Otherwise you are in for trouble . . . . I think the "post-nup" idea is a bad idea.

I had a substantially similar experience to DaftInvestor and in our case are happily married 25 years. Of course it helps that I am fully in charge of the finances!

:sharebeer
Firemenot
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Firemenot »

Whatyear? wrote: Fri Sep 25, 2020 3:20 pm Come to terms with the fact that everything is jointly owned. Otherwise you are in for trouble . . . . I think the "post-nup" idea is a bad idea.

I had a substantially similar experience to DaftInvestor and in our case are happily married 25 years. Of course it helps that I am fully in charge of the finances!

:sharebeer
100 percent agree with this poster. Also your net worth isn’t really that high to worry about and risk creating bad blood in a new marriage. She’ll never forget that you did. I speak as a guy happily married for 20 years. And I’d just forget about the income disparity. You’re a team now. Doesn’t matter.
Last edited by Firemenot on Fri Sep 25, 2020 3:31 pm, edited 1 time in total.
fuddbogle
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Re: How to combine finances with your spouse? Recently married/early30s

Post by fuddbogle »

Whatyear? wrote: Fri Sep 25, 2020 3:20 pm Come to terms with the fact that everything is jointly owned. Otherwise you are in for trouble . . . . I think the "post-nup" idea is a bad idea.

I had a substantially similar experience to DaftInvestor and in our case are happily married 25 years. Of course it helps that I am fully in charge of the finances!

:sharebeer
Agreed. You'll work harder at having a happy marriage and it may keep you from some late-night (or afternoon) "meetings".

Oh, and my wife has a saying, "What's yours is mine and what's mine is mine."
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Re: How to combine finances with your spouse? Recently married/early30s

Post by retiredjg »

I do not think it odd for a newlywed to think of "yours" and "mine". For some people, that goes away with the marriage ceremony. For others, it takes awhile. My observation is that this disappears completely with time and kids. At that point, everything belongs to everyone (except maybe inheritances).

Your net worth disparity at marriage might be an arguable point if you split. Makes some notes if it makes you feel better.

I don't think income disparities while married will matter at all to the courts. If it matters to you, you need to either grow into your marriage or just get out completely, the sooner the better.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Tattarrattat »

Been married 30 + years. For me, the whole point of marriage is going all in. Maybe it's the romantic viewpoint, rather than the fiscally prudent approach. But that's what it means to me.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by mptfan »

fuddbogle wrote: Fri Sep 25, 2020 3:30 pm Oh, and my wife has a saying, "What's yours is mine and what's mine is mine."
You should say that to your wife.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by stoptothink »

mptfan wrote: Fri Sep 25, 2020 2:01 pm
ChiLawyer wrote: Fri Sep 25, 2020 1:55 pmAt its core, neither of us comes from generational-sized wealth
Most people who get pre-nups do not come from "generational-sized wealth."
I was in a pretty similar situation 7yrs ago, 32 with a similar NW and decent income, fiance was a 28yr old single mom making ~$11/hr with a negative NW. We both come from generational poverty. She had zero issues with me asking for a pre-nup and we immediately combined all finances. My gut feeling was right (or maybe I was just lucky) as we've had issues, but not with money, and she now makes 6-figures and has greatly contributed to our now 7-figure NW.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Jags4186 »

I kind of think this post is odd. I mean you knew going in you make 10x what your spouse makes. What did you expect? The reality is you don’t really have that much money. If you split and she takes half oh well. $120k for someone to go away is a bargain.
Rlew
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Rlew »

What are you worried about protecting?

Relative to your income, your net worth isn't that high. Don't get me wrong, you are doing awesome at this point in life, but it's not like you have a $20million dollar net worth you are trying to protect. If you commingle funds and she divorces you a year later, she will walk away with a little more than $100k... That's less than half your annual salary.

And speaking of your salary, there isn't much you can do to protect in the event of a divorce given that you didn't sign a pre-nup. A post nuptial agreement is a legal option if she agrees, but it is a horrible relationship option.

I think there is a huge financial behavioral advantage to working together with your spouse towards your combined life goals. This means commingling funds, having one budget for both of you, viewing income as 'our income', debt as 'our debt', and discussing OUR life goals. I don't think it will take very long for the behavioral advantages to overtake the small asset protection benefits you get by keeping your ore-marital assets separate.

The benefits of playing 'mine vs yours' are short sighted and not even that big in your case. The benefits of working together with your spouse on finances are huge; in fact if you ask a group of bogleheads to list the important aspects of building wealth, I would bet the vast majority would list 'working together with your spouse' as a cornerstone of their success. I recommend going all in on the marriage, commingle everything, and make sure she knows it's all OUR income/money.
"When there are multiple solutions to a problem, choose the simplest one" Jack Bogle
Jags4186
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Jags4186 »

Rlew wrote: Fri Sep 25, 2020 3:44 pm What are you worried about protecting?

Relative to your income, your net worth isn't that high. Don't get me wrong, you are doing awesome at this point in life, but it's not like you have a $20million dollar net worth you are trying to protect. If you commingle funds and she divorces you a year later, she will walk away with a little more than $100k... That's less than half your annual salary.

And speaking of your salary, there isn't much you can do to protect in the event of a divorce given that you didn't sign a pre-nup. A post nuptial agreement is a legal option if she agrees, but it is a horrible relationship option.

I think there is a huge financial behavioral advantage to working together with your spouse towards your combined life goals. This means commingling funds, having one budget for both of you, viewing income as 'our income', debt as 'our debt', and discussing OUR life goals. I don't think it will take very long for the behavioral advantages to overtake the small asset protection benefits you get by keeping your ore-marital assets separate.

The benefits of playing 'mine vs yours' are short sighted and not even that big in your case. The benefits of working together with your spouse on finances are huge; in fact if you ask a group of bogleheads to list the important aspects of building wealth, I would bet the vast majority would list 'working together with your spouse' as a cornerstone of their success. I recommend going all in on the marriage, commingle everything, and make sure she knows it's all OUR income/money.
I would never agree to sign a post nuptial agreement and if I was asked to I’d start hiding cash and get ready for the divorce.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Firemenot »

Jags4186 wrote: Fri Sep 25, 2020 3:46 pm
Rlew wrote: Fri Sep 25, 2020 3:44 pm What are you worried about protecting?

Relative to your income, your net worth isn't that high. Don't get me wrong, you are doing awesome at this point in life, but it's not like you have a $20million dollar net worth you are trying to protect. If you commingle funds and she divorces you a year later, she will walk away with a little more than $100k... That's less than half your annual salary.

And speaking of your salary, there isn't much you can do to protect in the event of a divorce given that you didn't sign a pre-nup. A post nuptial agreement is a legal option if she agrees, but it is a horrible relationship option.

I think there is a huge financial behavioral advantage to working together with your spouse towards your combined life goals. This means commingling funds, having one budget for both of you, viewing income as 'our income', debt as 'our debt', and discussing OUR life goals. I don't think it will take very long for the behavioral advantages to overtake the small asset protection benefits you get by keeping your ore-marital assets separate.

The benefits of playing 'mine vs yours' are short sighted and not even that big in your case. The benefits of working together with your spouse on finances are huge; in fact if you ask a group of bogleheads to list the important aspects of building wealth, I would bet the vast majority would list 'working together with your spouse' as a cornerstone of their success. I recommend going all in on the marriage, commingle everything, and make sure she knows it's all OUR income/money.
I would never agree to sign a post nuptial agreement and if I was asked to I’d start hiding cash and get ready for the divorce.
Plus 1. Nothing good can come from broaching this topic with an already spouse.
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Ben Mathew
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Ben Mathew »

I think you may be approaching this in the wrong frame of mind. The $250K assets you're seeking to protect is small potatoes compared to your annual income. And it's nothing compared to the benefits of a happy marriage.

It would be different if you were older, had accumulated a lot of assets before entering the relationship, and wanted to protect it from someone who you think might be looking to take advantage. If none of that applies, let go and do everything in your power to have a long and happy marriage.

Good luck!
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Ben Mathew
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Ben Mathew »

Rlew wrote: Fri Sep 25, 2020 3:44 pm I think there is a huge financial behavioral advantage to working together with your spouse towards your combined life goals. This means commingling funds, having one budget for both of you, viewing income as 'our income', debt as 'our debt', and discussing OUR life goals. I don't think it will take very long for the behavioral advantages to overtake the small asset protection benefits you get by keeping your ore-marital assets separate.

The benefits of playing 'mine vs yours' are short sighted and not even that big in your case. The benefits of working together with your spouse on finances are huge; in fact if you ask a group of bogleheads to list the important aspects of building wealth, I would bet the vast majority would list 'working together with your spouse' as a cornerstone of their success. I recommend going all in on the marriage, commingle everything, and make sure she knows it's all OUR income/money.
Well said!
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Luckywon »

ChiLawyer wrote: Fri Sep 25, 2020 1:55 pm I decided it’s easier for me to not co-mingle premarital assets and set those aside (we are opening all new accounts post-marriage)

The premarital assets you are trying to protect are not very large and it will be difficult not to commingle them. For example, for your non retirement accounts, if you pay taxes on dividends and capital gains from them with marital funds, you are commingling them. I think that for you, the negatives of trying to do this greatly outweigh anything positive.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by khangaroo »

I'm in a relatively similar NW, age (31M/27F) and life situation as yours but the income is different. We're about go to get married in 2 weeks with my NW being $350k and hers is $30k but our incomes are similar at around $100k but she's forecasted to overleap me by tens of thousands within the next few years.

We're going with the 100% commingled route. "My" nest egg is no longer "mine" but "ours". We have long term goals together because of this relatively big nest egg that I'm bringing to the relationship that will allow us to quit the rat race sooner if we wanted to. Our day to day finances are "together, but separate". We have our own checking accounts and credit cards but we also have a joint checking account and credit card.

If you do split up and lose 50% of your nest egg then you're going to have to chalk that up to a valuable lessons learned on how to get alignment with your next wife - at least that's how I'm approaching it lol. I used to agree with the pre/post-nup routes but I can't imagine signing that kind of agreement with my financee now - just makes it feel like you're holding back. I'M ALL IN!!!
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Re: How to combine finances with your spouse? Recently married/early30s

Post by sls239 »

No, I don't think your nest egg is what you should concern yourself with much - although keeping the pre-marital accounts separate is fine, just realize that the earnings these accounts can be considered marital property.

I think what you should concern yourself with is your priorities as a married couple and getting on the same page.

It would be very easy for you guys as a couple to neglect your wife's career in favor of your own. But I want you both to really think about what that would cost. And that cost extends not just for a year or two, but because it alters career path - it really projects out increasingly over time to her lifetime earnings.

In fact, most women are financially worse off after divorce and it generally can be traced back to neglect of her career. So you really aren't doing either of you any favors if you just fall into that neglect without really thinking critically about what it means long term - together or apart.

And if you are going to support her career realize that it will require actual effort on your end. Being neutral and pretending like it is all her choice is likely to lead to her neglecting her career in favor of yours, whether you intend that or not. Things like you leaving work to go take the dog to the vet so that she can get in a couple extra hours may not seem, at face value as "worth it" but it very much can be.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by beachairs »

ChiLawyer wrote: Fri Sep 25, 2020 1:35 pm Reviving this thread for a moment. DW and I recently got legally married. We've postponed the "big" religious wedding due to COVID. I'm 30, she's 28. I have about a $235K NW split between retirement and taxable accounts (64% VTSAX, 16% VFWAX, 6% VBTLX, 14% cash/VMFXX for emergency + "big" wedding expenses). I have no debt and have about a $250K pretax income. DW has probably $10K NW, $25K income and $10Kish of student loans being paid by her parents.

I want to manage our finances in a way that builds trust and a collective future, but am rightfully concerned about protecting my "nest egg" given our income and NW disparities. Thoughts on how to best handle our accounts going forward?
You don't mention if DW is working part time while in school, home with kids, just starting her career, etc so it's not clear if the income disparity is temporary.

I encourage good communication about what each of you can spend because with her low income and you managing the finances, that can possibly lead to huge resentment. I grew up in a house where my mother had to ask my father for every dollar that she spent (even household groceries) while he did whatever he wanted. It should be a partnership, not dictatorship.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by mptfan »

beachairs wrote: Fri Sep 25, 2020 4:58 pmI grew up in a house where my mother had to ask my father for every dollar that she spent (even household groceries) while he did whatever he wanted. It should be a partnership, not dictatorship.
Was your mother resentful? You should not dictate how other people choose to live their lives, no matter how well meaning you may be, maybe some people like living in a dictatorship.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by JBTX »

Not a lawyer, but for that amount of money. I wouldn't think it is worth it. You should be able to clearly demonstrate what you came in with. Everything after that is fair game.

20+ years ago I had similar thoughts, as I was a few years older and had a more accumulated, especially given that was 20 years agos dollars. Even casually discussed with DW before marriage. She said she would do one if we wanted but she was a bit miffed at the suggestion. Decided against it, and 20 years later she is now primary breadwinner.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Mlm »

Rlew wrote: Fri Sep 25, 2020 3:44 pm What are you worried about protecting?

Relative to your income, your net worth isn't that high. Don't get me wrong, you are doing awesome at this point in life, but it's not like you have a $20million dollar net worth you are trying to protect. If you commingle funds and she divorces you a year later, she will walk away with a little more than $100k... That's less than half your annual salary.

And speaking of your salary, there isn't much you can do to protect in the event of a divorce given that you didn't sign a pre-nup. A post nuptial agreement is a legal option if she agrees, but it is a horrible relationship option.

I think there is a huge financial behavioral advantage to working together with your spouse towards your combined life goals. This means commingling funds, having one budget for both of you, viewing income as 'our income', debt as 'our debt', and discussing OUR life goals. I don't think it will take very long for the behavioral advantages to overtake the small asset protection benefits you get by keeping your ore-marital assets separate.

The benefits of playing 'mine vs yours' are short sighted and not even that big in your case. The benefits of working together with your spouse on finances are huge; in fact if you ask a group of bogleheads to list the important aspects of building wealth, I would bet the vast majority would list 'working together with your spouse' as a cornerstone of their success. I recommend going all in on the marriage, commingle everything, and make sure she knows it's all OUR income/money.
^^^^^^^This
beachairs
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Re: How to combine finances with your spouse? Recently married/early30s

Post by beachairs »

mptfan wrote: Fri Sep 25, 2020 5:06 pm
beachairs wrote: Fri Sep 25, 2020 4:58 pmI grew up in a house where my mother had to ask my father for every dollar that she spent (even household groceries) while he did whatever he wanted. It should be a partnership, not dictatorship.
Was your mother resentful? You should not dictate how other people choose to live their lives, no matter how well meaning you may be, maybe some people like living in a dictatorship.
Is this a serious question? Of course it was miserable! That's not how you treat your partner when they make it clear that is not how they wish to be treated.
mptfan
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Re: How to combine finances with your spouse? Recently married/early30s

Post by mptfan »

beachairs wrote: Fri Sep 25, 2020 5:28 pm Is this a serious question? Of course it was miserable! That's not how you treat your partner when they make it clear that is not how they wish to be treated.
You did not say that your mother made it clear that is not how she wished to be treated.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Monsterflockster »

atlgenxennial wrote: Fri Sep 25, 2020 2:59 pm Half is hers. That's what marriage is. Should have signed a pre-nup, or not gotten married.

It's that simple to me.
+1.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by ddurrett896 »

You make $250k, she makes $25k...what is there to combine?

Have her max our all tax advantage accounts, backsdoor Roth and use the rest to cover small expenses.

Same goes for you but you cover all the bills.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by CyclingDuo »

Monsterflockster wrote: Fri Sep 25, 2020 9:09 pm
atlgenxennial wrote: Fri Sep 25, 2020 2:59 pm Half is hers. That's what marriage is. Should have signed a pre-nup, or not gotten married.

It's that simple to me.
+1.
^^^^^ :beer
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ChiLawyer
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Re: How to combine finances with your spouse? Recently married/early30s

Post by ChiLawyer »

Thanks, everyone. Always appreciate the level-headed guidance on this form.
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Re: How to combine finances with your spouse? Recently married/early30s

Post by vitaflo »

ChiLawyer wrote: Fri Sep 25, 2020 1:55 pm I decided it’s easier for me to not co-mingle premarital assets and set those aside (we are opening all new accounts post-marriage) than it would be to do the emotional labor of a prenup conversation during the added stress of wedding reschedulings and a global pandemic.
Depending on your state laws, this won't matter other than to make you feel better about "keeping your money". But where I live, once you are married, you both own 50% of everything. The only exception to this is inheritance. So keeping your premarital accounts separate does nothing in the event of divorce. You would pool your NW, and she'll get half and you'll get half. Only way around this is pre/post-nup and as others have said a post-nup is not a great idea.

Note, all of this is about what happens in divorce. Again find out what your state laws are. It says nothing about how you handle your finances in marriage. My wife and I have separate finances because we did before we got married so it was just natural to us. And it works well for us. But I'm under no illusion that she isn't getting half if we ever got divorced, cuz she will.
Dyloot
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Dyloot »

ChiLawyer wrote: Fri Sep 25, 2020 1:35 pm Reviving this thread for a moment. DW and I recently got legally married. We've postponed the "big" religious wedding due to COVID. I'm 30, she's 28. I have about a $235K NW split between retirement and taxable accounts (64% VTSAX, 16% VFWAX, 6% VBTLX, 14% cash/VMFXX for emergency + "big" wedding expenses). I have no debt and have about a $250K pretax income. DW has probably $10K NW, $25K income and $10Kish of student loans being paid by her parents.

I want to manage our finances in a way that builds trust and a collective future, but am rightfully concerned about protecting my "nest egg" given our income and NW disparities. Thoughts on how to best handle our accounts going forward?
If you'd like my suggestion: take the remaining $10kish of her student loan debt and pay it yourself.

If you're capable of it--and it appears you're above capable of it--I'd show my wife and her parents that you're one of the adults in the room and you don't need her parents paying off her debts for her anymore. I mean, I get it. She's their daughter. But now, she's your wife. Do you need her parents providing for her financially?

That, to me, is an excellent way to build trust and respect between yourself, your wife, and her family. And it would be very easy for you to make this happen.

Just my two cents. Take it for what it's worth.

As for the post-nup and other techniques to protect your wealth from a divorce, I'd be very careful not to out-clever yourself by poisoning your own well and causing the mess you were taking steps to avoid. I don't know your wife, her friends, or her family, but the optics of this conversation are just horrible for you. I'd be shocked if that discussion went well for you in the long run.
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Doom&Gloom
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Doom&Gloom »

Mlm wrote: Fri Sep 25, 2020 5:22 pm
Rlew wrote: Fri Sep 25, 2020 3:44 pm What are you worried about protecting?

Relative to your income, your net worth isn't that high. Don't get me wrong, you are doing awesome at this point in life, but it's not like you have a $20million dollar net worth you are trying to protect. If you commingle funds and she divorces you a year later, she will walk away with a little more than $100k... That's less than half your annual salary.

And speaking of your salary, there isn't much you can do to protect in the event of a divorce given that you didn't sign a pre-nup. A post nuptial agreement is a legal option if she agrees, but it is a horrible relationship option.

I think there is a huge financial behavioral advantage to working together with your spouse towards your combined life goals. This means commingling funds, having one budget for both of you, viewing income as 'our income', debt as 'our debt', and discussing OUR life goals. I don't think it will take very long for the behavioral advantages to overtake the small asset protection benefits you get by keeping your ore-marital assets separate.

The benefits of playing 'mine vs yours' are short sighted and not even that big in your case. The benefits of working together with your spouse on finances are huge; in fact if you ask a group of bogleheads to list the important aspects of building wealth, I would bet the vast majority would list 'working together with your spouse' as a cornerstone of their success. I recommend going all in on the marriage, commingle everything, and make sure she knows it's all OUR income/money.
^^^^^^^This
+2

Disclaimer: DW & I have not comingled our accounts, but we share most expenses and our circumstances are much different from OP's. I see nothing but trouble ahead if OP tries to protect such a small sum relative to his income--particularly since their incomes are so lopsided.

Don't sweat the small stuff. For OP, this is small stuff imho.
mikejuss
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Re: How to combine finances with your spouse? Recently married/early30s

Post by mikejuss »

tim1999 wrote: Fri Sep 25, 2020 2:10 pm
Outer Marker wrote: Fri Sep 25, 2020 1:50 pm
ChiLawyer wrote: Fri Sep 25, 2020 1:35 pm Thoughts on how to best handle our accounts going forward?
A post-nuptial agreement.
Yep. He can still protect his taxable accounts, provided he doesn't later co-mingle them, and can probably at least protect the current value of the retirement accounts. In many states it is too late to have the spouse waive alimony, that has to be done with a prenup. Given the income disparity, this is probably where you would get shaken down in a divorce. In any event you would need to talk to a family law attorney in your state.
Interesting--so any asset one has up to the point of marriage would not be considered a marital asset in a divorce settlement, so long as the asset has not been commingled with the assets of one's partner? And what exactly constitutes "commingling"? This is a very informative thread.
Last edited by mikejuss on Sun Sep 27, 2020 1:45 pm, edited 1 time in total.
mptfan
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Re: How to combine finances with your spouse? Recently married/early30s

Post by mptfan »

mikejuss wrote: Sun Sep 27, 2020 1:26 pm Interesting--so any asset one has up to the point of marriage would not be considered a marital asset in a divorce settlement, so long as the asset is not commingled with the assets of one's partner?
The laws vary by state, but I believe that is generally correct.
mikejuss
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Re: How to combine finances with your spouse? Recently married/early30s

Post by mikejuss »

Rlew wrote: Fri Sep 25, 2020 3:44 pm What are you worried about protecting?

Relative to your income, your net worth isn't that high. Don't get me wrong, you are doing awesome at this point in life, but it's not like you have a $20million dollar net worth you are trying to protect. If you commingle funds and she divorces you a year later, she will walk away with a little more than $100k... That's less than half your annual salary.

And speaking of your salary, there isn't much you can do to protect in the event of a divorce given that you didn't sign a pre-nup. A post nuptial agreement is a legal option if she agrees, but it is a horrible relationship option.

I think there is a huge financial behavioral advantage to working together with your spouse towards your combined life goals. This means commingling funds, having one budget for both of you, viewing income as 'our income', debt as 'our debt', and discussing OUR life goals. I don't think it will take very long for the behavioral advantages to overtake the small asset protection benefits you get by keeping your ore-marital assets separate.

The benefits of playing 'mine vs yours' are short sighted and not even that big in your case. The benefits of working together with your spouse on finances are huge; in fact if you ask a group of bogleheads to list the important aspects of building wealth, I would bet the vast majority would list 'working together with your spouse' as a cornerstone of their success. I recommend going all in on the marriage, commingle everything, and make sure she knows it's all OUR income/money.
This seems like terrific advice. One thing I'd like to learn more about: how exactly does one commingle assets with a spouse? I'm supposing this means combining checking and savings accounts. But is it possible to combine brokerage, 401(k), and Roth IRA accounts too?
robphoto
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Re: How to combine finances with your spouse? Recently married/early30s

Post by robphoto »

I'm with the old married people here saying just combine the accounts and accept it. You don't want to be trying to keep track of whose money is whose for the rest of your life. If want to gradually even it out, make the taxable money joint now, and work on boosting her retirement accounts till they're similar to yours.
mptfan
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Re: How to combine finances with your spouse? Recently married/early30s

Post by mptfan »

mikejuss wrote: Sun Sep 27, 2020 2:28 pm One thing I'd like to learn more about: how exactly does one commingle assets with a spouse? I'm supposing this means combining checking and savings accounts. But is it possible to combine brokerage, 401(k), and Roth IRA accounts too?
It's possible to combine everything except qualified retirement accounts, such as 401(k)s and IRAs. The "I" in IRA stands for individual, retirement accounts of all types can only be individual accounts.
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wander
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Re: How to combine finances with your spouse? Recently married/early30s

Post by wander »

It sounds like an alarm to me. In our home, there is no her nor his money, but it's just our money. We have joint checking and brokerage accounts.
fortunefavored
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Re: How to combine finances with your spouse? Recently married/early30s

Post by fortunefavored »

I'll be somewhat contrarian and say there is zero harm in keeping your pre-marital assets separate for a while, just in case. Crazy things can happen - mental breakdowns, substance abuse, etc.

Just stop contributing/adding to your accounts when you get married and open new accounts.

I was in a similar situation 20 years ago and that is what I did - luckily it all worked out and we're still happily married, but you're never there until you're there.
Kelrex
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Re: How to combine finances with your spouse? Recently married/early30s

Post by Kelrex »

Pre/post-nups are a wonderful tool for couples who are on the exact same page that the default laws where they live are not appropriate for their particular situation. They can be a terrible tool to use to try and protect yourself from your spouse.

OP if your wife is already self conscious about making less money, then it's doubly important to be open and honest about both of your feelings on that matter. If you feel more entitled to your own earnings, then she needs to know that and also be okay with it in order for you two to have a healthy financial relationship.

If she wants full financial equality but senses that you don't, then that might be what's making her feel self conscious. You can't know unless you talk to her about it.

My recommendation? Pour two nice hot travel mugs of coffee and go for a long ass walk and talk through all of it. Then repeat that weekly forever.

Your question is about combining finances, but what it really should be about is establishing a solid financial communication foundation.

Your circumstances and finances will change over time, as will your priorities, attitudes, and beliefs. You need an incredible capacity to communicate about money if you want to navigate it all with another person.
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