Merge Left

Charlene writes in:

I’m getting married in March. My future husband and I are talking about when and how to merge our finances and we’ve had some difficulty coming up with a plan. What did you and your wife do? What would you suggest for other couples on the cusp of marriage?

First of all, I’ll point out that when my wife and I were first married, neither one of us had any clue about how to manage our money. We basically left all of our accounts the same, keeping accounts and direct deposits at separate banks and without any sort of shared savings or checking accounts. This worked for us for a while, but it had serious disadvantages, chief among them the fact that it was hard for either one of us to really get a grip on what our true financial situation was.

I would not recommend doing that unless you have a very good, clear reason for doing so. It’s very clear in that wonderful 20/20 hindsight that the disadvantages of such a split far outweigh the advantages.

Instead, I would fold your accounts together at whichever bank the two of you already use that offers the best customer service. Don’t worry about things like savings rates and such for your primary accounts – if you want to seek out a great savings rate, seek that out separately and use a second bank for your savings purposes. The most important factors on your primary checking account and bank services are the customer service provided to you and the lack of fees on the account for various things (keeping the account open, ATM use, and so on).

I would not do this until you’re married, but I would follow through with the plan pretty quickly after you’re married. Before you’re married, you’re basically opening yourself up to the potential for a very sticky situation without any real benefit other than just a bit of short term convenience.

Instead, invest your time coming up with a detailed plan before the wedding so that you can just quickly execute it after the marriage, getting your affairs in order as quickly as possible.

You may also want to consider a prenupital agreement. You may be deeply in love right now, but people can and do change. A prenupital agreement makes any divorce process that may happen much simpler and less fraught witn anger and emotion, both of which you can surely live without in such a situation. If you find agreeing on a prenupital agrangement is difficult, you may want to step back and have some discussions about why this is – and what that might mean for your relationship.

Another thing worth considering is life insurance. Now that you’re merging your financial lives, you may find yourself investing in things that you may not be able to afford individually, like a home, more expensive cars, or children. A term life insurance policy can ensure that your partner is not stuck in an incredibly difficult financial situation should you pass away unexpectedly. Even if you don’t have such expenses now, term life insurance is still worth considering because the cost of a policy is much lower when you’re young than when you’re older (or have pre-existing conditions that may be discovered later on).

It might seem strange at first glance to suggest this as financial advice, but I would strongly encourage you to have discussions about such issues as having children now rather than after you’re married. If you have differing feelings on such key issues and haven’t come to an understanding about them (and trust me, quite often one side thinks there’s an “understanding” and the other side does not), they can fester within a marriage, turning a loving situation into something painful and often quite financially costly for everyone involved (well, except for the lawyers – they clean up). Talk things through – items such as future career plans, dreams, ambitions, children, and so on should be discussed and understood and both partners should at least understand each other’s positions, even if they’re not fully on the same page.

Marriage isn’t something that benefits from being entered into lightly. Merging your accounts is just the first step – you’re often merging lives in ways you never even considered before. Take the time now to at least consider these changes – and talk about them – before you take the plunge.

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