You’re married! Time to choose the drapes, discuss having kids, and join all your bank accounts… Wait, what?!? Actually, Matt Becker explains to us how couples can remain individuals even after tying the knot.
I hop onto Skype for the first call with my new clients, a newly married couple who want to get their financial life in order as they start building their family.
I ask them about their goals and they confidently tell me about the things they want to achieve: paying off student loans, building up savings, and prepping for a baby. They know what they want and they’re ready to make it happen.
But then they bring up one more thing and the tone kind of shifts.
They tell me they haven’t joined bank accounts yet and they’re looking for some advice on how to do it. They sound a little ashamed of their separate accounts, but also a little hesitant about the idea of joining everything. I can tell that they’re not really sure how to navigate this question, and that it’s a little uncomfortable for them to talk about it.
I’ve seen this before. Many of my newlywed clients feel like they’re supposed to join accounts, but they struggle with the idea of joining everything when one spouse earns more or brings significantly more savings to the relationship. They wonder whether a desire to keep some money for themselves means they’re selfish or that their marriage is on the rocks. And they worry about the challenge of managing their money together and what it will do to their relationship.
I can tell this couple is nervous about at least some of those things, but I have some good news for them: Whether or not they join bank accounts doesn’t matter. It is only logistics.
I advise clients that there are only two things that actually matter when it comes to joining their financial lives:
- Setting joint goals, and
- Having a system to work towards them together.
What kind of life are we building?
I tell the couple, “This is a really common question, especially for newlyweds like yourselves, and I can certainly help you create a system that works for you. Let’s step back for a minute and talk about your goals a little more.”
In my experience working with couples, the good ones do one thing really well: They work together to build a life that makes them both happy.
From a financial standpoint, that means that they start by nailing these two aspects:
- Creating a joint vision for what they want out of life, and
- Setting concrete financial goals that will help them make that vision a reality.
This is a fun process. After all, you’re talking about building a life together and it can be exciting to imagine what that life might be.
But it is difficult as well. No matter how much you love each other, you’re still two separate people. It’s only natural for you to have slightly different views on what you want out of life which leads to disagreements, frustration, arguments, and maybe even some hurt feelings along the way.
So I ask my clients for a little more detail about their goals, and something interesting happens when we get to the topic of building up their savings.
It turns out that the wife is primarily thinking about building up their savings account, while the husband is thinking more about maximizing their various retirement accounts. It’s the kind of disagreement that can immediately create some tension, but instead of trying to figure out who is “right,” I ask them each to explain their point of view.
The wife knows a bigger savings account would help her feel secure. They have a lot of big transitions ahead of them and there will probably be some unexpected expenses. Having that savings on hand will keep them safe.
The husband knows how important it is to start saving for retirement early and how beneficial it can be to put money inside accounts like 401ks and IRAs.
The truth is that they are both right. And, to their credit, they do a fantastic job of listening to each other, hearing the merits of the other person’s perspective (not always an easy thing to do!), and eventually coming to a compromise so they can work towards both goals at the same time.
By talking about their goals, finding commonalities, and working through their differences, they are able to create a joint vision for the life they’re building together. That’s the first step.
How can we build this life together?
Once they had those goals in place, they needed to create a system for their money that worked towards them.
At this point it would have been easy to get stuck on the joint vs. separate debate again, but what I really wanted them to know is that there’s no one system that works for everyone. Each couple is going to have their own way of doing things, and that’s okay.
What matters is that the system helps you reach your goals, not that it looks a certain way or conforms to someone else’s standard.
So we talked about their options. Joining all of their accounts was certainly one, with one of the big potential benefits being the simplicity of having one pile of money instead of multiple.
But they didn’t have to do that. They can keep their accounts separate and simply decide ahead of time who pays what bills and how much each person should save for their joint goals. Or they can do a combination of the two.
Once they saw that they have options, and that either one can help them reach their goals when executed correctly, they liked the idea of taking things slow. So they decided to open a joint checking account for their joint bills and joint savings accounts for those joint goals we talked about.
But they also kept their individual accounts and simply transferred agreed-upon dollar amounts to the joint accounts each month. This system allowed them to work together on the things that were really joint (their bills and goals) while leaving each of them with some autonomy to spend money as they pleased.
They had found a system that works for them, and of course they have complete freedom to tweak it down the line if they desire.
It’s your life. Build it how you want.
It would have been easy for this couple to get caught up in their anxiety over joining accounts and let it derail their financial life together right from the start.
But instead they focused on the things that matter most: the joint goals they were setting together. Those goals made them a team, and from there it was simply a matter of creating a system they could both live with.
They are not worried about whether the system looks a certain way to anyone else; they know it is going to work for them. Which is all that really matters.
What do you think? Will you completely join financial forces with your spouse? Let us know why or why not in the comments below.
Matt is the founder of Mom and Dad Money, a fee-only financial planning practice dedicated to helping new parents build happy families by making money simple. His free time is spent jumping on beds and building block towers with his two awesome boys.