Merging finances

When Dan and I moved in together, we decided on a system where we would have one joint account which we each contributed the same amount to every month, even though we don't have the same salaries, out of which we would pay for rent, utilities, groceries, and gas, pretty much. Fairly minimal spending on "extras" in common and separate savings and retirement/investment accounts.

We talked over what we wanted to do after getting married and decided that we would give merging our finances some more a go but if it didn't work and caused conflict, we could just go back to the way we had it before. I had some concerns around maintaining financial independence since I like to spend more money than Dan does but I do also make a bit more. I just didn't want to feel any additional burdens of guilt or pressure on top of what I already have for internal gauges of frugality.

Post-wedding, it turns out I don't really care as much as I thought I would about keeping things separate, plus Dan followed through on his promise to worry less about money without having the wedding to pay for. We set it up so that we each kept our own emergency funds, pooled together the cash gifts from the wedding into joint savings, and re-arranged our direct deposits to put the bulk of our paychecks in the joint accounts. Dan also paid off his car loan with the additional liquidity now available to him.

I get a small allowance into my own account still, basically so I can buy clothes and shoes without feeling like I have to consult with Dan (fall boots yay!). Everything else comes out of the joint account, including Dan's student loan payments, and we decided to just set a rule of needing to check with the other before making purchases that are over $50. That was implemented after a month or two of feeling confused about what would be ok to go on the joint (individual nights out with friends?) to make it all simpler.

We're tracking everything on Mint. I tried it once before but preferred the greater control I had over splitting up and categorizing purchases with the spreadsheet that I made for myself in college. Mint has improved since then and the convenience of being able to log a transaction online mostly outweighs my annoyance with its occasional miscategorizations and its limitations around keeping track of how much petty cash you should have around.

Some other perspectives on merging finances after marriage:

• Megan McArdle thinks joint accounts make a lot more sense in most cases: "Money Talks: Yours, Mine, and Ours"
• Get Rich Slowly interview on keeping separate finances

I also did a little bit of research on what's the deal with filing taxes now that we're married:

• Filing your first tax return as newlyweds
• When sharing taxes might not be a good idea
• Marriage's financial pros and cons
• About.com's articles on filing jointly versus filing separately

In summary, if you were married on December 31st, 2011, you would be considered married for all of 2011 from a tax perspective, which seems a bit weird but I guess makes things simpler. Filing jointly is generally better for couples where one partner makes a lot more than the other, but if you both work and make about the same (our situation), you should at least consider filing separately. Most people seem to advise preparing tax returns in both ways and see whether you are in fact affected by the "marriage penalty."

The other consideration is contributions to a Roth IRA. I've had a Roth IRA account for awhile, contributing the max to it when I have enough extra from the year. I already put in the max for me for 2011, so I was thinking that we should open one up for Dan and put some bonus money I've gotten into that account. Unless one of us goes back to school full-time or we have kids and one of us stays home full-time (both unlikely at this point), our incomes should increase over time, potentially to the point of not being eligible for contributing to a Roth IRA anymore, so I figure we should get more in there while we still can.

Dan thinks we should consider larger joint investment/savings account and such, like for buying a house or something, but we don't have any plans to buy property in the next few years since I'd like to live on the west coast for a few years still but we'd most likely settle back on the east coast afterwards. You can withdraw contributions (though not earnings) to a Roth IRA at any point so we could tap into it for a down payment without incurring penalties. However, you can't contribute the full amount to a Roth IRA if you're married filing separately, so we'll wait until we get our W2s for 2011 and do some calculations then since I think we'd still be able to put in Roth IRA money for 2011 until April 2012.

A couple articles on Roth IRAs:

• Wikipedia's article on the Roth IRA
• Get Rich Slowly article: "Eight little-known facts about the Roth IRA"

If you're new to personal finance, the Get Rich Slowly blog is not bad. For books, I'd recommend On My Own Two Feet: A Modern Girl's Guide to Personal Finance to start with and then The Bogleheads' Guide to Investing once you want to get more in-depth into investing.