Published on 02-20-2020
Last week, we started the discussion about merging finances as a married couple. We got into the meat the potatoes of accounts - your checking and savings.
Those are absolutely essential in handling your day to day finances, however, for most couples, it’s just the tip of the iceberg.
Between the two of you, you may have other accounts like your credit cards, car and student loans, investments, and insurance.
How do you two navigate and sort everything out?
Today I want to dive into some of the conversations you need to have so you can figure out how to start merging and aligning your finances together.
After getting your checking and savings situation squared away, you can now look at reviewing your workplace benefits. It’s not the most exciting discussion, but you can have some big wins.
First off, if you’re newly married or had a significant life event, you should check with Human resources to update necessary documents like your W-4.
Depending on your circumstances, you may not have the correct amount of money withheld from your paychecks, leaving you either overpaying (and significantly shrinking your paycheck) or underpaying (which can lead to an unpleasant tax bill).
Next look at your health insurance and related benefits. Run the numbers to see how much things would cost if you stayed with your employer plan or if one of you switched to the other’s plan. Take time to examine the premium costs, coverage offered, and expected out of pockets expenses.
Repeat this process for dental and vision insurance as well. You want to make sure you’re not leaving money on the table.
Even though 401(k)s and similar plans are offered through work just like health insurance, investments deserve their own discussion.
When it comes to saving up for retirement, you now have an added layer to think about.
On the plus side, with another person contributing it can be a tremendous boost to your retirement pot. Are you both maxing out your accounts? Are you at least contributing enough to qualify for a match?
Another topic to talk about is what you’re invested in. We don’t have the same risk tolerance so your spouse may be more conservative or a risk taker than you.
The other side to consider is they may have a different goal for both when they want to retire and how retirement in their mind looks.
It may be helpful to have a financial professional work with you two to see how you can align your investments towards a shared goal.
They can offer an objective perspective and point out ways you can adjust your budget to increase contributions if that’s something you’re going after.
Besides the additional income and more options between the two of you with work benefits, there’s another area of money you need to address - debt.
Between credit cards, car and student loans, it’s not uncommon for one or both spouses to come into a marriage with debt.
So how does debt work when you’re married? Who’s responsible for what?
Legally, you need to know, you are responsible for the debt you acquired before you married. Going forward, when you both apply for a loan - be a it a car loan or mortgage- both of you are responsible for it.
What if one of you has horrible credit? What if one of you has a huge amount of debt while the other doesn’t?
This is where the two of you need to sit down a few times and work out not only how much debt there is but dig into the background of how they got it. Once you have a clear idea, it’s easier to decide how you want to tackle things.
It may be a case where the debt is from irresponsible spending (in some cases, a sign of a spending problem). On the other hand, it could be that as they took on student loans so they could become an attorney, physician, or dentist.
You have to weigh everything and make a decision that you’re both comfortable with.
If you’re looking to set things up with your accounts, perhaps open up a joint account, consolidate accounts, or just get an idea of where you are now, Coastal has some great options for you.
Elle Martinez is the creator of Couple Money, a personal finance podcast and site focused on helping couples get on the same page, dump their debt faster, start building wealth together
1Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS; are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Coastal Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.