As if a wedding wasn’t enough to handle, a couple also needs to plan for how they are going to manage money after marriage. Some couples choose to join their assets, while others have a combination of joint and separate accounts. Here is a guide on how to combine your money in a marriage.
Introduction
As you prepare to discuss money with your partner, be honest and open with yourself and with them. Many couples find it difficult to discuss money, but doing so will help enable them to be better prepared for marriage and upcoming decisions. Lies and omissions are not helpful when discussing money. Try to keep the conversation calm and under control, as many people become emotional when discussing money.
It is important that both people feel comfortable and that his/her opinion matters. Each couple handles money decisions differently, but both partners should be involved. Just because one partner makes more money than the other does not mean that person will be able to make all the money decisions. Marriage is a partnership and both people involved need to have a voice in any decision making.
Step 1: Go Over Assets
Sit down with your partner and list out every account held by each of you, including bank and credit union accounts, credit cards, insurance policies, investment accounts, retirement accounts, and student loans. This can also be a good time to discuss general money issues, including the salary of each partner, debt of each partner, and future money related goals (a nice house in the country). Presumably, you already know each others spending habits, but talking about priorities and trying to understand where each other stand on money issues can be a big help in the future.
Step 2: Downsize
Once you each have an idea of all of the accounts owned by each partner, you can begin deciding which accounts to close and which to keep. At this stage, you need to decide if you are going to have joint accounts, or a combination of joint and separate accounts. You will also need to decide what accounts to close.
Checking accounts
- Many experts recommend that a couple have at least one joint checking account. Before marriage the couple can change their direct deposit paycheck from their employer to be deposited in the joint account. Some couples also choose to have separate checking accounts instead of a joint account or in addition to a joint account.
Savings accounts
- A couple can also have a joint savings account for their emergency and other savings.
Investment accounts do not necessarily need to be combined, but allowing each partner to know the balance of these accounts is a good idea.
Credit cards
- Couples can ask that a spouse be a co-owner or authorized user of credit cards. Closing credit cards can hurt credit scores, so sometimes just deciding which cards to use and which cards to destroy is a good solution. When deciding on what credit cards to use, also remember any store cards (Macy's, Victoria's Secret, etc) that you use.
Insurance
- Combining car insurance into one policy can allow the couple to receive a two-car discount. Many times, married couples get a discount when compared to single people. Also, remember to cancel any unneeded renter’s insurance policies after the marriage when the couple lives together. If co-habitating before marriage, check to make sure no one is paying renter’s insurance on an apartment or house not inhabited anymore.
Cell phone
- Many times a couple can save money by combining accounts in to one family plan. This may have to wait until after cell contracts expire because many cell phone carriers charge fees to terminate a contract early.
Retirement accounts(401(k) and 403(b) accounts) cannot be combined.
Step 3: Name Changes
Before marriage you can set up some accounts, such as a joint checking and savings accounts, credit cards, and sometimes insurance. Remember that if the woman is changing her name, she will have to notify the banks, credit cards, etc of the name change after the marriage. Many states have time requirements when changing a name on a driver's liscense. Generally, people change their social security card and driver's license first because these cards can be used as proof of a new name when changing names on bank accounts. Some banks and credit cards will want to see a marriage certificate or marriage license in order to change the name on the account.
