12/20/2012 6:30 PM ET|
Saying 'I do' to joint accounts
How do you make your union a sweet financial partnership? Consider your options as a team and take a businesslike approach.
Earlier this year, a couple of my good friends got married to each other. After a few months and the initial jubilation passed, the time came to turn their attention to the more businesslike aspects of sharing their lives -- and their finances.
Combining checking accounts and coordinating credit cards might seem like a simple proposition, but they learned there are some important points to consider before taking the plunge. My newlywed pals passed along this wisdom on the process, so I thought I'd share it with anyone else whose accounts may soon be wed to a partner's.
Opening a joint checking account
Both of my friends are entrepreneurs. She runs an online retail store, and he's self-employed as a massage therapist, so they approached the union of their finances as a business deal. They were used to handling balance sheets in their professional lives, so it seemed natural to treat their new joint checking account as a merger.
First, they sat down and looked at bank options for their new account. They had each been with the same (separate) banks for years, and it was important to them that they look at all the information and agree on the location for the new account.
They ultimately chose to join a local credit union, one that neither had used before. Looking at the various options together helped them both feel comfortable about the choice. They now refer to their joint checking as the "company account."
Sharing credit cards
Next, they looked at merging credit card accounts, which can be a little trickier. Most people they talked to advised them to have a shared card for household expenses, but not to combine the cards they use for personal spending.
I like this advice. It doesn't make much sense to deal with more than one bill for things like groceries or utility payments, especially if your credit scores are similar.
Keeping small personal accounts is important, though -- especially if you like to treat your partner with gifts, theater shows, vacations or other pleasant surprises. How could they be surprises if they show up on a shared bill? By keeping both personal and joint cards, you'll have a "company card" for basic needs and individual cards for discretionary spending.
It's important to note, though, that there's really no such thing as a joint credit card. Usually, one person opens the card in his or her name and signs the other up as an authorized user. Once you know what type of expenses you're likely to charge on the joint card, you may want to opt for a particular type of rewards card, such as one that offers bonuses for gasoline or business purchases.
Final thoughts on your new 'family business'
Don't let the word "business" scare you off. Examining the nuts and bolts of your shared accounts and expenses is an important step in your partnership. A tradition of open communication about your finances can help avoid a lot of headaches in the long run.
Of course, if you and your partner operate on a single income, the details of your joint finances may be a little different. In all cases, though, communicating openly and honestly with your partner is still the best way to prevent money from creating rough spots in your relationship.
Perhaps the most important thing that came out of my chats with my newlywed pals was that going over their finances together helped them feel even more like equal partners. It helps a lot, they told me, to feel like they're really in this together.
So, for better or worse, for richer or poorer, taking the right steps to combine your finances can help ensure a solid partnership with your spouse for years to come.
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If you decide to have separate accounts for whatever reason, just please make sure you have the accounts tiltled as POD ( Payable on Death ) to make things easier on the spouse in the case of death. Saves alot of paperwork and red tape, especially at a difficult time.
Joint accounts can work for those married couples that each are intelligent, truly love each other, and probably more importantly, are moral people in general. They don't work when either spouse is missing 1 or more of these 3 things. A better way to determine if a joint account will work for you and your spouse is to take an honest assessment of both yourself and your spouse in terms of having these traits. You cannot force a joint account to work, and you cannot outright say it won't work. It will only work for those couples that have a healthy dose of these traits. Sorry for those who have posted saying joint accounts didn't work out for you, but one or both of you were missing one of these traits in a serious way. The fact that most of those people are divorced says it all.
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