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How to have separate finances and have a successful marriage

Having separate financial accounts during marriage is becoming more common as couples marry later in life or enter into second marriages. So how do you keep the finances separate while still nurturing a healthy relationship? Follow this advice to financially prepare and succeed in your marriage together.


Do

Do discuss money before you marry

There are numerous studies which show that the number one source of problems in most marriages is finances. In order to get a healthy start on how you will handle money in your marriage, both of you first need to learn what the other is thinking in terms of life experiences, hopes, dreams, and goals. After having several conversations about money, you can then decide whether or not it makes sense to keep your funds separate. If it feels like it can work or will benefit the relationship, then start your marriage with a plan in place.

There is no right or wrong answer, whether you should keep your checking and/or savings accounts separate or not. It all depends on what you both decide is best for your relationship. Plus, it is often a lot easier to combine accounts at a later date, than trying to separate already commingled funds. 

Do develop a system

There are many different ways in which to manage separate accounts and joint expenses. Some couples split everything down the middle, while others lump expenses into general categories and each person takes responsibility for paying what they agree to. It’s not uncommon either for couples to pool funds into a common account for contributions to items such as family gifts, emergencies and entertainment. How you decide to pool (or not) your money should make sense to the both of you. Just be clear on the system you decide to follow, so that there are no surprises (or arguments) later down the road.

Do work with an advisor that understands

It has become more common for married couples to have separate financial accounts. Retirement accounts have always been held individually, but now checking, savings, and non-retirement accounts are often held and managed by each individual within a marriage. The reasons for this vary: perhaps they each came into the marriage having handled their own finances for years and want to keep it that way, or they may have such a wide stance on risk tolerance, that having separate investment accounts makes a lot of sense. Your advisor should be understanding of the situation and also willing to provide a comprehensive look at what assets look like individually and as a couple—especially as it might relate to diversification issues.

Do have an overall financial review together

Even if you have separate accounts, it makes sense to review all of your finances jointly at least every two to three months. During the review you can talk about any increases in costs (i.e. property taxes, entertainment, etc.), potential income changes for either the positive or negative and if there are any changes in the division of responsibilities that need to be made. Reviewing finances as a couple also keeps the lines of communication open. Make time to review together even if your schedules are demanding.

Do share common goals

Purchasing a home or having a child brings you both together around finances. Even though you may have separate accounts, you understand that your marriage and future are a team effort. Mutual respect and having each other’s best interests at heart is key to this success. Your financial advisor should also be a good sounding board and can work with you both towards the goals that you have set as a couple. 


Don't

Do not be petty

True story: All night a couple—with separate banking accounts—divided each and every bill down the middle, right to the penny, causing their group of friends to feel very uncomfortable.

If you do decide to keep your finances separate, have a game plan for those items that can’t be divided neatly. Marriage is a give and take, and as long as it is generally fair, you will both benefit and enjoy the time you have together. 

Do not listen to naysayers

Couples do and can successfully manage their finances separately. But it isn’t for everyone. If you have friends or family who want to throw negativity into your situation, be tactful but direct, and ask them not to interfere. It is a bonus to be able to share in financial responsibilities just like every other couple. It isn’t for everyone, as with most things, and that is okay.

Do not be secretive

If you get a raise or bonus, you don’t tell your spouse, and hide the money away—you are betraying their trust. Financial infidelity can be just as painful as any other type of cheating. In order to manage separate accounts in a healthy manner, be honest about how much you are making. This is also true if you are paying more than you originally decided together. If you don’t bring up the issue, it will more than likely cause resentment and may eventually make communication a problem in your relationship.

Do not forget to name a beneficiary

This is especially critical when you have separate accounts. Most firms and banks allow you to establish either a Payable On Death (POD) or Transfer On Death for non-retirement accounts. Both allow for the money remaining in the account(s) when the account owner dies to pass directly to the named individuals established by the account owner. A nice benefit to setting up your accounts in this manner is that they generally skip probate. However, to make sure that you are covered and everything is structured properly, consult with an estate planning attorney.

Do not think fair equals 50/50

In most relationships, one person makes a little more than the other. It is a true rarity for two individuals to make the exact same amount of money, year over year. Make sensible decisions when it comes to who will pay for which costs, this is especially true if there are children involved. As long as it feels fair and you are happy with the situation, it doesn’t have to be penny for penny on each and every item.


Summary
Jumping cartoon

Money and marriage can go hand-in-hand with the right communication and strategy. No two couples will handle finances the same way; do what feels right for your relationship and situation. Separate financial accounts can work and often are key to long-lasting marriages.


More expert advice about Finance for Couples

Disclaimer:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Please note neither LPL Financial nor any of its representatives render legal advice. This information is not intended to be a substitute for specific individualized legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: RI, MA, CT, FL, ME, NJ, OH, PA, NY, DE. Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.

Photo Credits: Ammentorp/Bigstockphoto.com; Check Man, Cross Man and Jump Man © ioannis kounadeas - Fotolia.com

Michelle Cortes-HarkinsMSW, CDFA™, CRPC®

The focus of my practice is on women in transition; women who are changing employment, entering into motherhood, going through a divorce, widowhood or preparing for or starting retirement. I use tools from my social work background, such as a...

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