5 Best Practices for Married Couples Merging Finances

Wedding planning is the best time that you never want to have again. The bachelor or bachelorette party, the wedding shower and people doing things for you that they normally wouldn’t do are all fun experiences. Paying for the wedding, dealing with parent’s “opinions” and delving through 40 iterations of who sits at table 7 are not as fun. Now that the cake is in the freezer for the next year, let’s look forward at how newly married couples can set themselves up for financial success.

Merging Bank Accounts

There are many different opinions when it comes to the best way for couples to merge their bank accounts. Often, most of them will inevitably lead to fights. Married people still want a sense of independence and that can be reflected in a person’s bank account. It’s never good when one partner is mad at the other one for spending too much on a certain item. A best practice is to have one main bank account that is used for saving and paying fixed expenses (mortgage, utilities, groceries, etc.). The couple should agree on how much each person can contribute each month towards the main shared bank account. Both partners should then have their own accounts which can be spend on whatever they choose.

Re-Evaluate Employee Benefits

A married couple has a 60-day window from their wedding date to make any changes to their employee benefits. This is an opportune time to evaluate a partner’s health and dental plan. When analyzing a health plan, a person should look at the following aspects of a plan; the deductible, the monthly premiums, the out of pocket maximums and the network size. Often it will make sense to consolidate into one health plan, but make sure the employer offers an employee and spouse plan.

Financial Conversation

The number of married couples that rarely discuss their finances is staggering. Other than the common discussions around paying bills or buying a house, most couples are not on the same page financially. Instead of sitting in silence at dinner ask each other these three questions:

1)      What did your parents teach you about money?

2)      What do you want our retirement to look like?

3)      How much and where should we save our money?  

Protection Strategy        

Most married couples now have two incomes. As a result, most financial decisions are made based on having two incomes (mortgage payments, college funding, car payments, etc.). No one likes to talk about bad things happening, but what would be the financial impact if someone were to lose their ability to earn an income or died prematurely? Often, the financial consequences can be dire. Ensuring that the right disability and life insurance coverage is in place can provide a layer of financial protection that can keep a couple in their house or pay for their children’s college.

Coordinate Investment Accounts

Married couples should get on the same page when it comes to their investments in two ways; their allocation and their tax strategy. Married couples should look at their 401k plans, IRAs and investment accounts and make sure their allocations are in line with each other’s. Often, a couple’s combined allocation will have overlapping funds or won’t sync up with their risk tolerances. Couples should understand the differences between ROTH and Traditional investment options. Since most couples file taxes jointly, they should make sure they have a strategy to reduce taxes now and in the future.