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Before officially tying the knot, there are a handful of key conversations you should have with your soon-to-be spouse. These may include discussing where you want to live, if you want kids and what your future career goals look like.
Along those lines, one topic that should certainly come up is money. How you manage money can be a very personal decision, but now that you’re partnering up with someone else, it’s crucial that you’re both on the same page.
“We encourage clients to move away from thinking of their assets and liabilities as mine or yours and instead to think of them as our assets and liabilities,” says Priya Malani, a New York-based founding partner of Stash Wealth, a millennial-focused financial-planning firm.
If you’re planning to get married soon, or you’re a recent newlywed, you’re probably going to merge finances with your spouse in one way or another. Here are a few options to consider when planning where to put your money after you get married, plus what to do if you don’t want to combine finances at all.
Malani doesn’t recommend all couples open a joint checking account, just those who are serious enough to live together or get married. A joint checking account is one account for both you and your partner’s paychecks to be deposited in and withdrawn from to pay for your everyday life. This can include expenses for the things you consume together like rent, utilities and groceries, as well as expenses for the things you may do separately like travel or dining out.
All your expenses should come from this pooled account so that you don’t have to keep track of who paid for what, Malani says.
“This helps create a team mindset and, since you’ve decided to prioritize your life together no longer as two individuals, your account architecture should reflect [that].”
When shopping around for the best joint checking account, consider those with zero fees. Select ranked Capital One 360® Checking the best overall no-fee checking account thanks in part to its top-rated mobile app, physical bank locations and an above-average APY.
The bonus of using a joint checking account, too, is that you no longer have to send each other Venmo requests for bills since they’re being paid from one bank account with your combined money.
Part of making goals with your partner is planning how you’re going to save up to achieve them. Whether it’s a down payment on your first home or a luxury vacation, opening up a high-yield savings account together will help you earn more interest than you would from a traditional savings.
Malani suggests keeping the money you plan on using in a completely separate account from the checking account you use for everyday spending.
“We like using a high-yield savings account offered through an online bank like Ally, which allows your money to work harder for you and has the added benefit of keeping your savings out of sight, out of mind,” she adds.
Select ranked the Ally Online Savings Account as one of the best high-yield savings accounts for doing all of your banking in one place since it also offers a checking account option. Savers with Ally can also organize their saving goals by creating up to 10 different “buckets” within the same savings account.
Annual Percentage Yield (APY)
No monthly maintenance fee
Up to 6 free withdrawals or transfers per statement cycle *The 6/statement cycle withdrawal limit is waived during the coronavirus outbreak under Regulation D
Excessive transactions fee
$10 per transaction
Offer checking account?
Offer ATM card?
Yes, if have an Ally checking account
Once living together or married to your partner, you can both work on setting aside funds for any potential emergencies like a sudden car repair. A high-yield savings account can be the perfect place to build this emergency fund.
Malani recommends you both work to set aside cash savings that is equal to three months worth of your joint fixed expenses (think rent, utilities, groceries, transportation costs, etc). To make it easier on the both of you, set up to have money automatically transferred into your emergency fund account on the same day each month.
Sharing a credit card can be a smart way to maximize the rewards you can earn on all your joint purchases, whether you open a joint card or have the spouse with the lower credit score become an authorized user on the other’s credit card (which comes with the added benefit of potentially boosting their credit score).
If you sign up for a rewards credit card, you can “use your newly established joint checking account to pay off that credit card every month, and you’ll be earning flight credits, hotel rewards and other bonuses along the way,” Malani says.
Plus, teaming up with a partner might make good financial sense. Rather than paying two annual fees, you can pay an annual fee plus an authorized user fee, which ends up costing less.
For example, the Chase Sapphire Reserve® has a $550 annual fee 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 may want to 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 top rewards cards with no additional authorized user fees.
Retirement accounts cannot be held in joint names, but there is a workaround for this: Designate your spouse as the beneficiary to your account should anything happen to you.
“Federal law requires the spouse to be the primary beneficiary of a qualified plan like a 401(k) plan, unless a waiver is executed,” says Paul Gaudio, a New Jersey-based wealth planning strategist at Bryn Mawr Trust. “Some states require the same for an IRA account.”
While the assets in your retirement accounts, like a traditional/Roth IRA or 401(k), cannot be combined with those of your significant other, Malani also has a tip for sharing retirement strategies: You should have one retirement goal as a couple and therefore one strategy that ensures all accounts (whether in your name or theirs) are being considered with the joint goal in mind.
“For example, if you and your partner need to contribute 10% of your household income to be on track for your joint retirement goal, but your company offers a better match, you might split the total percentage up differently than each contributing 5%,” Malani says. “Maybe you do 6% and they do 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 on how you spend your money or maybe you just want to preserve a sense of autonomy. Whatever the case may be, it’s helpful to walk yourself through your decision-making to really evaluate whether it makes sense to keep things separate.
“Keeping separate accounts can magnify financial tensions, especially if dollar amounts and transactions are kept private,” Gaudio says.
For those who are still hesitant to be completely open with their money, Malani recommends a “side stash” workaround for both partners. You keep the direct deposit of your paychecks going into the joint checking account and then set up an automated transfer to each of your individual checking accounts. The monthly transfer amount must be the same for both partners.
“Side stashes are there with money you can spend on whatever you want, away from the eyes of your partner,” she says. “It’s your judgment-free zone. Many couples find this to be a helpful tactic to keep using their money for the things they love, but their partner may not understand, all while avoiding arguments.”
How to collaborate better when combining finances
There are a number of budgeting apps designed exclusively for couples, which makes it easier than ever to manage your money together. Honeydue, for example, is an app that links to all your joint and separate bank accounts so together you and your partner can coordinate bills and collaborate on shared savings goals. The app also offers a messaging feature so you can communicate through the app, as well as a no-fee joint checking account with free ATM access and a debit card for both partners.
Information about the Capital One® Venture® Rewards Credit Card and Bank of America® Cash Rewards credit card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.