Merging Your Money When You Marry

October 26, 2016

Getting married is exciting, but it brings many challenges.  One such challenge that you and your spouse will have to face is how to merge your finances.  Planning carefully and communicating clearly are important, because the financial decisions that you make now can have a lasting impact on your future.

Discuss your financial goals
The first step is to discuss your financial goals.  Start by making a list of your short-term goals and long-term goals. Then, determine which goals are most important to you.

Prepare a budget
Next, you should prepare a budget that lists all your income and expenses over a certain time period.  You can designate one spouse to be in charge of managing the budget, or you can take turns keeping records and paying the bills.  If both of you are going to be involved, make sure that you develop a record-keeping system that both of you understand.

Bank accounts – separate or joint?
At some point, you and your spouse will have to decide whether to combine your bank accounts of keep them separate.  Maintaining a joint account does have advantages, such as easier record keeping and lower maintenance fees.  However, it is sometimes more difficult to keep track of how much money is in a joint account when two individuals have access to it.

Credit Cards
If you are thinking about adding your name to your spouse’s credit card accounts, think again.  When you and your spouse have joint credit, both of you will become responsible for 100 percent of the credit card debt. In addition, if one of you has poor credit, it will negatively impact the credit rating of the other.

If you and your spouse have separate health insurance coverage, you’ll want to do a cost/benefit analysis of each plan to see if you should continue to keep your health coverage separate.  You will also want to compare the rate of one family plan against the cost of two single plans.  It is also a good idea to examine your auto insurance coverage too.

Employer-sponsored retirement plans
If both you and your spouse participate in an employer-sponsored retirement plan, you should be aware of each plan’s characteristics.  Review each plan together carefully and determine which plan provides the best benefits.  If you can afford it, you should each participate to the maximum in your own plan.  If your current cash flow is limited, you can make one plan the focus of your retirement strategy.

Please call our office at 763-231-9510 to set up a time to meet with one of our Wealth Advisors to discuss your situation and evaluate your goals.

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