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 A marriage brings together not just two individuals, but also their bank accounts.

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Ask Key Questions

Are wedding bells in your future? Congratulations! While many hours of planning go into marriage preparation, don’t forget to have one crucial conversation with your significant other before tying the knot. Schedule a time to sit down and discuss how you are going to manage finances as a team after saying “I do.”

Be prepared for the discussion by jotting down some questions to help lay a foundation for further financial decisions. The following are questions that you or your partner may be hesitant to answer, but are vital to ask before a life-long commitment to one another

  • What Kind of Debt Do You Have? – Do you have student loans or credit card debt? How about vehicle or home loans?
  • How Much Debt Do You Owe? – Sure, you should know where the debt is coming from, but more importantly, you should know how much debt you and your partner owe. After all, that total debt just might fall on your shoulders after you’re married.
  • Do You Have Savings? – Whether or not someone has a savings account, as well as the amount they have in it, tells a lot about their financial personality. Your partner’s answer to this question will help you determine what kind of spender (frugal or lavish) they are.

To Combine or Not to Combine: Pros and Cons of Combining Finances

Managing finances as a team does not necessarily mean you have to share checking and savings accounts. Whether or not you decide to share an account, you do need to be on the same page about how bills get paid in order to have a successful financial future. Let’s look at some pros and cons of combining financial accounts.

Pros:

  • Joint checking and savings accounts can lower monthly maintenance fees and reinforce record keeping.
  • Joint accounts can help encourage communication between one another and foster teamwork between you and your partner. Shared expenses means more sense to pull from one account.
  • Timely, consistent payments allows both individual to improve their credit score. If accounts are separate, the individual whose account doesn’t pay the bills suffers from would-be boosts to their credit score

Cons:

  • Oftentimes, there is a saver and a spender in relationship-shared accounts, which can lead to many arguments over how to spend money.
  • It’s difficult to surprise one another with gifts since the information is listed on the statement.

If you both decide to merge your finances, the next steps are easier than you may think!

  1. Create a list of all the accounts and credit cards in each of your names.
  2. Closely examine the fees, rewards, and interest rates associated with each account to determine which ones make the most sense to move forward with.
  3. Visit your financial institution to add both names to the accounts. Once both names are on the account, take care of changing any direct deposits or bill pays to the shared account.
  4. It’s a good idea to leave all the accounts open for a couple of months to ensure everything is running smoothly before closing out accounts.

Major Financial Decisions to Agree On

Ah, so you’ve asked the tough questions and talked about whether or not to merge accounts, and now you’re all set, right? Not so fast. There are other major financial decisions and expectations to iron out before you can get back to caterers and florists. Here are a few topics you might want to throw into the mix:

  • Job and Income Expectations – Will you both hold full-time jobs? Or will one of you work while the other stays home in the future to take care of the house and kids?
  • File Taxes Jointly or Separately? – Don’t let April 15th roll around without discussing this detail!
  • Long-Term Financial Goals – When would be ideal to start investing and/or saving for retirement?
  • Savings Plan – What percentage of your combined income will be put into savings? (i.e. an emergency fund or savings for further education)

Card Card Spending Limitations and Payback Plans – How many credit cards should be opened? What is the maximum amount you will spend with the credit cards? What is your plan of attack for repayment?

Time to Create a Budget for Two!

Creating a budget allows you and your partner to take charge of where your money goes each month so there are no surprises.

The two most basic components of a budget are: all sources of income and non-negotiable expenses, such as living necessities (housing, utilities, groceries, transportation) and recurring bills (loan payments, credit card payments).

From there, you can budget for discretionary spending such as eating out, gym memberships, and other non-essential expenses.

Last, but not least, account for a portion of your income to go towards emergency savings. This is vital for instances such as a heater that kicks the bucket in mid-January. Your back-up savings will prepare you for unexpected bills.

Interested in receiving advice for your financial needs? Contact us to help you achieve your goals.

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