What to do with money when you get married

Before you officially get married, there are a handful of key conversations you should have with your future spouse. It could be discussing where you want to live, if you want kids, and what your future career goals will look like.

In this sense, one topic that should definitely be discussed is money. How you manage your money can be a very personal decision, but now that you’re partnering up with someone else, it’s crucial that you both are on the same page.

“We encourage clients to no longer view their assets and liabilities as mine or yours and instead of seeing them as our assets and liabilities, ”says Priya Malani, founding partner of New York Hide wealth, a millennial-focused financial planning company.

If you are planning to get married soon, or if you are a newly married couple, you are likely going to merge finances with your spouse in one way or another. Here are some options to consider when planning where to put your money after your wedding, as well as what to do if you don’t want to combine finances at all.

Malani does not recommend that all couples open a joint checking account, only those who are serious enough to live together or get married. A joint checking account is an account for you and your paychecks to deposit and withdraw to pay for your daily life. This can include spending on things you consume together like rent, utilities, and groceries, as well as spending on things you can do separately like travel or dining out.

All of your expenses should come from that joint account so you don’t have to know who paid for what, Malani says.

“It helps create a team spirit and, since you’ve decided to prioritize your life together and not two, your account architecture should reflect [that]. “

When shopping for the best joint checking account, consider the no-cost ones. Select the Capital One 360® ranking Global toll-free current account thanks in part to its top-notch mobile app, physical bank locations, and above-average APY.

The advantage of using a common checking account is also that you no longer need to send yourself Venmo bill requests since they are paid from a single bank account with your combined money.

Part of setting goals with your partner is planning how you’re going to save money to reach them. Whether it’s a down payment on your first home or a luxury vacation, opening a A high yield savings account will help you earn more interest than you would with traditional savings.

Malani suggests keeping the money you plan to use in an account completely separate from the checking account you use for your daily expenses.

“We like to use a high yield savings account offered by an online bank like Ally, which makes your money work harder for you and has the added benefit of keeping your savings out of sight, out of sight. spirit, ”she adds.

Select has rated the Ally Online Savings Account as one of the best high yield savings accounts for doing all of your banking in one place because it also offers a checking account option. Savers with Ally can also organize their savings goals by creating up to 10 different “buckets” within the same savings account.

Once you live together or are married to your partner, the two of you can set aside funds for any potential emergency, like a sudden car repair. A high yield savings account can be the perfect place to build that emergency fund.

Malani recommends that you both work to set aside cash savings equivalent to three months of your common fixed expenses (think rent, utilities, groceries, transportation costs, etc.). To make it easier for both of you, set up automatic money transfer in your emergency fund account on the same day of each month.

Sharing a credit card can be a smart way to maximize the rewards you can earn on all of your joint purchases, whether you open a joint card or the spouse with the lowest credit score becomes a authorized user on the other’s credit card (which has the added benefit of potentially increasing their credit score).

If you sign up for a rewards credit card, you can “use your new joint checking account to pay off that credit card each month, and you will earn flight credits, hotel rewards, and other ongoing bonuses. road, ”said Malani. .

Plus, teaming up with a partner can make good financial sense. Rather than paying two annual fees, you can pay an annual fee plus authorized usage fees, which ends up costing less.

For example, the Chase Sapphire Reserve® has an annual fee of $ 550 and it’s $ 75 to add an authorized user. So instead of both of you paying $ 550 to each have the card, you can pay $ 625 together.

You and your spouse can also consider credit cards that don’t charge authorized user fees. Chase Sapphire Preferred® Card, Capital One® Venture® Rewards credit card, Bank of America® Cash Rewards credit card, Citi® Double Cash Card and American Express® Gold Card are the best rewards cards with no additional usage fees allowed.

Retirement accounts cannot be held in the common name, but there is a workaround: Designate your spouse as the beneficiary of your account if something happens to you.

“Federal law requires the spouse to be the primary beneficiary of a plan qualified as a 401 (k) plan, unless a waiver is executed,” says Paul Gaudio, a wealth planning strategist based in New York. Jersey to Bryn Mawr Trust. “Some states require the same for an IRA account.”

While the assets in your retirement accounts, like a Traditional / Roth or 401 (k) IRA, cannot be combined with those of your loved one, Malani also has a tip for sharing retirement strategies: You should have a goal. retirement plan and therefore a strategy that ensures that all accounts (whether in your name or theirs) are viewed with the common goal in mind.

“For example, if you and your partner need to contribute 10% of your household income to be on track for your shared retirement goal, but your business offers a better match, you can divide the total percentage differently from each contribution. by 5%, “Malani said.” Maybe you make 6% and them 4%. “

If you don’t want to merge finances with your partner, Malani suggests asking yourself why not. Maybe it’s because your partner has opinions about how you spend your money, or maybe you just want to maintain a sense of empowerment. Either way, it’s helpful to walk you through your decision-making to really assess whether it makes sense to keep things separate.

“Keeping separate accounts can amplify financial strains, especially if dollar amounts and transactions are kept confidential,” Gaudio explains.

For those who are still hesitant to be completely open with their money, Malani recommends a “side-by-side” workaround for both partners. You keep direct deposit of your paychecks to the common checking account, then set up an automated transfer to each of your individual checking accounts. The amount of the monthly transfer must be the same for both partners.

“The side hiding places are there with cash you can spend on whatever you want, away from your partner’s eyes,” she says. “This is your non-judgmental zone. Many couples find it a useful tactic to continue using their money for the things they love, but their partner may not get it, while avoiding arguments.”

Capital One® Venture® Rewards Credit Card and Bank of America® Cash Rewards Credit Card information was independently collected by Select and was not reviewed or provided by the card issuer prior to posting.