After months of planning, (do you really need a double boiler on your registry?) to saying, “I do,” to writing thank you notes— finally— you’re able to slip into newlywed bliss.
You can keep the lovey-dovey grin on your face. But we know, you’re not naïve. Now the real work begins. Couples bicker. After all, as Noah so eloquently told Allie in “The Notebook,” “That’s what we do. We fight.”
Did you know that finances cause the most arguments between couples? A 2018 Ally survey found more than a third of people who are married or in a serious relationship say money is the number one cause of stress in their relationships.
Fights between significant others may be unavoidable, but merging finances with a joint bank account can be one way to begin a transparent financial life together. There’s no law requiring it—you can still file your taxes jointly if you have separate accounts—but several benefits do exist.
If you and your spouse are thinking about merging your finances, consider these tips to ensure a financial “happily ever after.”
Have the Talk.
You might be embarrassed, but it’s important to get any monetary skeletons hiding in your closet out in the open. See how this newlywed revealed her online shopping secrets.
Today’s young people are smothered by student loan debt, so that’s a common issue. But are you in serious credit card debt? Or do you have other payments, such as an auto loan?
Since you’re married, you probably already have an idea of how your significant other spends his or her money, whether it’s on travel, dining out, or golfing. On the flip side, do you know how much your spouse makes? Or how much he or she has saved for retirement, emergencies, and/or other goals?
Draw up a plan.
The two of you just pulled off the wedding of the year, so you’re obviously great planners. So now what do you want your future to look like?
Your answer should be more in-depth than two kids, a dog, and a house in the suburbs. (And, no, a baseball-playing boy named Michael, the future Mrs. President, and a two-story with an open floor plan doesn’t count.)
Ask yourself: What are your goals? Where do you see yourself in five, 10, and 30 years? Do you want to retire early? Buy a second home? Go on annual vacations? Have kids?
Yes, planning for the future can be daunting and difficult to envision. But it’s important to discuss your dreams and goals so you can save for, work toward, and accomplish them.
Once you map out your plan, revisit it regularly and revise it based on changes in income and expenses.
Related Content: Savings by Age: How Much to Save in Your 20s, 30s, 40s, and Beyond
Should you say ‘I do’ to combining your bank accounts?
What works for one couple doesn’t work for another, but a joint account can offer some benefits.
Perhaps the biggest advantage of a joint account is your money is in one place. This makes it easy to see where it goes and—because there are two sets of eyes on every statement—can help you catch a banking error or suspicious charge.
Sharing an account may encourage you to hold one another accountable, too, as you are each responsible for the other’s financial actions. This can keep you on track to reach your financial goals and discourage you from racking up a ton of debt or making a significant purchase without a conversation first.
And, in case one of you has a major health emergency or passes away, the other will have access to all available funds to pay medical bills and take care of everyday living expenses. Otherwise, you may find yourself navigating a months-long legal ordeal before you can access the money.
Pros of having a joint account:
- All your money is in one place
- Helps you both stay on the same page
- Easy accessibility in times of emergencies
Of course, there are drawbacks, and one benefit mentioned might’ve caught your eye: sharing an account might mean you have less financial freedom. In other words, you might be saying sayonara to the days of going on a guilt-free shopping spree or purchasing every new Apple product the day it’s released without fear of judgment.
There’s also the very real likelihood that one of you has a higher salary than the other. If you make $70,000 and your spouse earns $50,000 a year, you might feel like you should make the money decisions and have the freedom to buy whatever you want.
Work to discuss these kinds of inequities openly, respectfully, and constructively so that one of you isn’t left feeling less-than, which will lead to marital angst down the road.
Cons of having a joint account:
- Less financial freedom
- Contribution differences
- Communication challenges
Related Content: 5 Things to Consider Before Opening a Joint Account
How to retain your financial freedom
It is possible to get the benefits of a joint account while also retaining your financial freedom. It’s a word you’ll both come to live by: compromise.
Consider opening a joint account, allocating a certain percentage of your paycheck to it, and putting the remainder in a personal account. Pay for shared household expenses like your mortgage or rent, groceries, utilities, and insurance out of the joint account. Your personal account can be for your own discretionary spending—shopping sprees, tech toys, and gifts for each other.
But what about savings? Who contributes to it? This is where the plan you created comes in handy.
If you have common goals such as buying a second house or going on annual vacations, you can each contribute. But if you want to go on a yearly trip with friends or buy the newest drone and your spouse doesn’t, that money should come out of your personal account.
How much you each contribute to your individual savings is up to you. But for the joint savings account, consider keeping it even and divvying up your contributions by percentage. For instance, regardless of how much you each earn, put 10 percent of your salary into the joint savings account.
The steps after the aisle
If you’ve decided to open a joint account together, follow these steps:
1. Open a checking and savings account.
Open a joint checking account (or add one of you to an existing account) and a savings account, like an Online Savings Account at Ally Bank. This way you can pay your bills out of checking and set aside money in your savings for whatever goals you’ve set.
2. Update your current automatic deposits and payments.
If your paycheck needs to be direct-deposited into a different account, consult your company’s HR department and provide them with your new information. Be sure to update any recurring payments (cell phone, Netflix, Amazon Prime) and make sure scheduled payments have cleared before closing old accounts.
3. Double check all accounts.
After a month, look at your old accounts and make sure all deposits and payments are properly set up.
Related Content: Combining Finances: Get on the same financial page from the start
Financially “Happily Ever After”
Now that you’re working together, don’t set it and forget it. Just like a good marriage requires work, so does your financial togetherness. Reserve money date nights specifically dedicated to discussing your finances. Review your plan regularly, whether it’s monthly, quarterly, or annually—and especially after a big life-changing event, such as having a child or buying a new home.
These regular, open check-ins can be a way to stay on track—all the while planning what you want to have together—and save you from a lot of financial fighting.
Now, about which family the two of you are going to spend the holidays with next year. . .
At Ally, we’re over 8,500 teammates committed to doing it right. That means helping you and your loved ones navigate the complexities of a financially happy ever after. Learn how you and your significant other can reach your goal at Ally Bank today.