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The Financial Nuptials

Together you said “I Do”.  The hopes and dreams to build a future and a family together are alive.  But now what? One of the hardest things couples do when joining their lives together is merging their finances. How do you combine financial bliss with marital bliss?

Good news: a 2005, Ohio State University study shows a sharp increase in wealth for married couples.

The first step is ensuring all beneficiary information is correct on IRA’s and 401K’s.  Also, if life insurance is already in place, make sure it is going to the appropriate person. 

Next, if both members of the couple have employee benefits, the couple must evaluate and decide which plan to continue forward with and which plan to drop.  One person might have stronger benefits than the other.  Evaluating these and picking the best one can be a complicated task.

As for daily finances, I find most couples enjoy a little bit of independence.  No one enjoys being questioned or ridiculed on every purchase.  I like my things; my wife likes her things.  How do you maintain some financial autonomy without disrupting financial bliss?

I operate under the belief that ‘one plus two accounts’ is best.  If both partners have jobs and a steady stream of income this is easier.

Set up one main account for all communal living expenses such as house, car, groceries, etc.  All income from both parties ideally goes into this account.  When the main living expenses are met, two individual accounts are funded with an equal, agreed upon amount.

The two ‘Freedom Accounts’ are just that – accounts for no-questions-asked spending.  This way when you bring home something expensive, the only relevant question is if you stayed within your ‘Freedom Account’ amount, not the cost of the item.  If one partner chooses to save and the other spend, there can be no hard feelings for personal choice.  H/she might be saving it for something special together, or for a getaway with friends.

Now if one or both of you is self-employed, or income is sporadic, this can be tough to do.  Communication is key. Setting the eventual goal of combining finances is a great way to enjoy successes together.

At the end of the day, marriage is about communication and understanding.  With financial stress the leading cause of divorce, eliminating some of the financial pressure leads to greater wealth and less trauma to a relationship.  In effect, keeping the wedding bliss.