Congratulations! You’ve made the leap into a lifetime together, and now you’ve joined your families, your friends and … your back accounts? Financials are an important topic in any relationship and become even more important as you make big steps towards building a life together. But, how do you do that? Is one joint account the answer, or should your keep your own accounts?
Some newly-weds are concerned that separate bank accounts make it easier to keep your lives separate and to split up in the case of a rough-spot in your marriage. However, it is not uncommon to have married couples having separate accounts. A 2014 TD Bank Survey of people married or in long-term relationships who have joint bank accounts also have separate bank accounts. So, there’s no right or wrong answer for your banking set-up. What works for the couple next store doesn’t necessarily work for you. There are a few important steps to make sure that you’re your love and money both have a happily ever after.
Talk it Out
Before heading down the aisle, talking about the future is important. Amongst the discussions of career and family, the important though less exciting financial talks should happen. If you have yet to have The Money Talk, then make a date and get started. Everyone manages their money differently. Some people save every penny, while others splurge at every opportunity, and there’s every style in between. In The Money Talk, you both need to define and describe how you deal with money. And you have to do it honestly. Of course, we would all like to be that person who only spends responsibly and has healthy savings accounts. However, you can’t plan your financial future for yourself and for your new life partner without a clear understanding of your monetary ways.
When you both have an honest picture of your finances, share them with each other. How do you like to spend your money? Do you have credit card debt? What’s your credit history like? What are your savings goals? When would you like to retire? What is your current bank and what kinds of accounts do you have? Do you want to rent or buy a home? If you want to buy, when and how much do you want to have saved before buying? Do you have student loans? Do you want to go back to school? Do you want to travel the world? These kinds of questions are important to ask. You won’t have answers to them all, but the asking them is an important step. Be patient and don’t worry if you find some answers surprising. It’s normal. Finances can be a stressful topic. Some people are happy to review every penny and others freak out at the thought their accounts. The talk might be simple or complicated, but either way, the hardest part will be over with: starting The Money Talk.
Once you have an understanding of your financial situation along with your personal and couple goals, then you should talk to your banker. The first meeting with your banker (or bankers, if your accounts are at different institutions) is an informational one. No papers should be signed and no accounts opened or closed. Simply ask what your options are for both joint and separate accounts. Understand the logistics and costs. With this information, you’ll know a bit more of what to expect from the accounts aspect.
Based on your discussions and the information provided by your bankers, you can now make a decision about what kind of accounts you would like set-up. There are a range of options, though the three most basics ones are: one joint account, one joint account with two separate accounts, or two separate accounts. Any of these choices are great so long as you and your partner are comfortable with it. Pick the best option for the two of you, based on your needs and financial styles, not based on what you think you should have.
Set-up Your Accounts
When your decision is made, you can then start planning your accounts. Perhaps nothing will change. Perhaps you’ll combine your spending accounts for bills and monthly expenses, but keep separate savings ones. Perhaps you’ll merge everything, including some of your investments. Whatever the combination, you need to set-up certain check-ins. Responsibilities of who pays which monthly bill need to be decided. For large purchases, like a shopping trip or new computer, some couples will want to have a check-in before the purchase. For joint savings efforts, like vacations or a home down payment, some couples will want to discuss contributions, or even set up automatic ones. With these roles defined, you can move forward with your new financially joined lives.
Keep On Talking
Of course, finances change as life does. With promotions and layoffs, holidays and vacations, births and deaths, different situations require emotional and pragmatic consideration. When these changes arise, you’ll need to address how that will affect your spending. For good or for bad, these conversations need to happen. No one likes surprises (unless it’s the surprise of winning the lottery!), so it’s essential to have an open dialogue about money matters. Be prepared to share your concerns and expectations, and to change your earning and spending based on what’s needed for your relationship.
There is no one correct way to set up your financial systems as a married couple. With a range of options, you need to figure out the best one for you two. And there’s nothing to say that you might change your account set-up in the future. As your marriage evolves, your finances will, too. It’s important to stay honest, to be clear and direct. Your banking style can be wildly different from your partner’s, but with good communication and planning, that difference will not only not be a problem, but could provide valuable new perspective. Building a happy marriage takes lots of love and hard work. Put some of that hard work towards your collective finances and it will certainly pay off.