(Prosperity - Brian S Glaser)
After searching high and low for a good financial planner and advisor, I found the perfect one on the pillow next to mine. My wife Eileen, a textile designer by day, uses her own quick wits to handle all fiscal matters big and small for our household. Pillow Talk is a close look at marriage, finance and communication.
When Eileen and I got engaged, it was the most natural thing in the world. It was a (mostly) seamless merger. But with mergers come acquisitions, and suddenly we were the Noah’s Ark of finances - two savings accounts, two checking accounts, and investment accounts that stretched from NY to RI. Suddenly my wife, who adopted my cat as her own and didn't blink at the thought of being with me for the rest of her life, felt weird about conjoining the cash.
After establishing herself as a self-sufficient woman, she wasn't ready to let go emotionally of that independence. Yep, it's not just the Benjamins, and Al Hams that come into play when you combine houses fiscally. It always bears repeating that finance is about emotions; adding romance to the recipe just makes for an extra-emotional issue. A couple just has to recognize it as such and work through it until both partners feel comfortable. Which is what we did: a few weeks after our wedding, Eileen and I headed over to the bank, filled out the papers, and soon the accounts that were mine were now ours.
And with these new ATM cards, we were even more wed. That's our storybook ending, but there are a couple of things to keep in mind when it may be time to have your deposit slips cohabitate:
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Speak Now and Never Hold Your Peace – this may seem like a no brainer, but as Rebecca found out in writing The Money Talk, most couples keep financial secrets from each other.
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Recognize that the scale is not perfectly balanced. Someone makes more, someone earns less. Personal wealth should not come in the way of personal happiness. There’s no clear cut strategy for blending two incomes, but it’s a sure fire route to failure if you hold this over your partner’s head.
- Set Goals. Not just both short and long term goals of where you want to be, but also set goals of when you will discuss your finances (monthly, quarterly, review portfolio strategy annually).
- Think Long Term. Be prepared and make sure your S.O. is as equally prepared. You never know when Murphy, the world's worst house guest, will show up, and be prepared with the location of wills, insurance policies, lock box keys and all of those details.
- The Name Game – According to The New York Times, almost 80 percent of brides change their names. If one or both of you will be changing your name, that's going to impact how the merging of accounts will work. You need government-issued ID to create or change almost any kind of account, so you may want to go through changing names first. And if you're getting into a civil union or some other type of long-term partnership, the banking rules may be different yet again.
- Shop around: Different banks will give you different deals, and those deals might change once you're married. Even if one of you has been with a particular bank for years, the addition of a second income to the account may entitle you to a better interest rate or fancier checks.
- Keep working on it: Like your marriage, your banking arrangements will have their ups and downs. If one of you finds that your current setup just doesn't have the same magic it had at the beginning, re-approach and re-adjust. You're mixing your money for the long haul here, and it's important to work on both partners' long-term banking happiness.
Here's some thoughts on your options. But again - Do what feels right: Some couples are OK with having all of their money in the same pot, but that's not for everyone. Another option is to have those joint accounts, plus smaller checking accounts for each of you so you can have "your" pocket money. Or you can have different savings and investing accounts that all hook up with a joint checking account. Just like there's no one perfect formula for a perfect marriage, there's no one way to arrange your accounts. Find what works for both of you.
Separate - At the most basic level, separate accounts protect everybody. What’s yours is yours, and what’s you spouse’s remains your spouse’s. You don’t have to worry about losing your financial identity and your credit rating when you each keep separate accounts. Plus, if either of you are bringing just a little extra baggage to the affair – other obligations like alimony or child support – this might be the easiest way to handle the complexities of a financial relationship. You do have to worry about two things though – making minds meet when it comes to bills you haven’t planned for, like a new heating unit for the house you both live in, or a vacation for both of you . Also collectively, you’re losing out on the power of compounding. While you may each have separate savings accounts and plans with earnings, by joining the two together, you increase the earnings potential.
Joint and Separate – This may be as easy as bringing combining some of your separate accounts for the purpose of savings, but leaving a bit on the side for each you. Because, just like handing over the remote, ceding total financial control may take some time of adjustment. This system does demand some time at the start. You’ll need to figure out how joint expenses are going to be handled as well as how contribution to any joint accounts will be made. Odds are, one of you will make more than the other. Experts suggest, if equality is important to your relationship but one of you is on a Chevy Nova budget and the other an Audi, you consider putting into joint accounts percentages from each that you can agree on in advance.
Joint – You’re very comfortable talking in the third person and don’t miss the first person at all? Then this is the money management system for you. Here, everybody’s working towards common goals, and it makes money management for everyday things like bills very easy – each of you always knows where the cash is. And if nothing else, joint ownersip gives you both something to talk about – your finances. The drawbacks? You need to be very good communicators, because two people with a lot vested in one system have no place to hide. Each of you needs to be comfortable with the other’s spending habits. This system also places demands on the household’s CFO that are made on the other spouse.
Finally, go ahead and let the whole world know you’re married. The Motley Fool found that companies issuing car insurance were more likely to lower the premiums of couples who were married. While you might not ask your company’s HR rep to the ceremony, take the time to discuss insurance options. There may be savings to be had in having both of you covered under one plan at one employer, or at the least, better benefits. On the other hand, some companies may offer a stipend for couples who don’t file as families.
