For those who’ve finally decided to tie the knot, congratulations! You’re probably starting to think about your future together and what comes with that are finances.
Sometimes, finances can be the cause of a lot of stress between relationships, but with proper guidance you and your significant other to achieve some big goals like retiring early, starting a business together, or paying off all your debt.
The key to making all of your relationship dreams a reality is the ability to work on your finances together. Merging your money can make the difference, so here are some ways on How To Merge Bank Accounts After Marriage.
Create & Design Your Dream Plan
The first step in any financial plan, whether you’re single or married, is to create a plan that will fit your lifestyle. The problems that most couples will have tend to happen at the beginning because they are unsure on what they want to save their money for. As a result, they start living paycheck to paycheck and not have any money saved.
One of the most intimidating tasks as a couple is to financially plan for retirement. The number that you come up with might be more than you can actually pay for currently.
However, a less daunting task you can do is to plan for a vacation. A vacation is much easier than planning for retirement and it teaches you how to define a goal and how to breakdown the costs of all the things you want to do.
Perhaps retirement is not on the top of your priority list. Another way to reach those big goals is to have small goals, like paying off your credit card debt. Having these small wins can motivate you to keep saving towards bigger goals.
Build a Financial Snapshot
The next move to merging your accounts is to know what you’re starting with. Knowing your net worth as a couple can help you figure out what you need to work on to achieve the goals you set for yourselves.
If you don’t have many accounts between the two of you, you can simply subtract your liabilities from your assets. If you do have many accounts, then try searching for tools online that can help you calculate your net worth. Once you choose a system to help you determine your net worth, stick to it to keep your money dates consistent and smooth.
Build a Budget You Both Love
Budgeting the amount of money you earn per paycheck can be a stressful task for new couples. Just know that this is an important task to help you save for your future. In fact, it can be as detailed or as broad as you both are comfortable with.
If you aren’t a fan of traditional budgets, like some people are, here are a couple of methods you can try to help you save some money:
- 50/20/30: Also known as the three bucket system, this is a savings system that splits your income into three parts. 50% of your earnings will go towards bills, 20% will go towards your savings, and 30% will go towards any of your leisure activities. This is a great and simply way to start saving.
- Zero Based: This method is based around the idea that every dollar you earn or use has a purpose. This method might be a more difficult to keep track of, but there are many tools out there that can help you keep track of your money.
- One Income Living: If you and your significant other plan on retiring early, then putting all of your essentials under on income is the easiest route to take. Some couples are able to achieve the goal of early retirement because they kept their expenses low.
Merging Your Money
Getting to this point means that you two have decided on a goal or two to pursue and have a budget that can meet those expectations. The next step in the process would be to get all of your accounts in order. A way of automatically moving your money to where it needs to go can help.
Most couples are busy, whether it be their work or children, and that can get them behind on certain things. Paying bills on time can be a difficult task for a new couple that both lead full lives, so having automatic bill pay set up can be a solution to that problem.
The decision of whether you want to have all joint accounts, all separate accounts, or a combination of the two accounts is up to you. A joint checking and savings account means bills can get paid and money can get saved using your collective income. However, with the addition of a personal checking account, you can still have the freedom and money to do what you’d like.
Once you’ve decided on what method works best for you, here are the steps to merging your money:
- Open joint checking and savings accounts (or add your spouse to yours). Having joint accounts can make things easier and allow you see what’s going on. At the very least you’ll be sharing many day-to-day expenses and you have a few milestones you’d like to tackle together. If you’re moving your money, make sure it’s with a bank or credit union that has features you need and want. You may find that a local credit union or community bank offers the service you prefer without the needless fees.
- Notify your Human Resources contact and have them update your deposits. You’ll want that money moving to the joint accounts and if you haven’t already, go ahead and have automatic transfers made into savings.
- Set aside an afternoon to set up your bill pay, transfers, and retirement contributions. It took me less than an hour to schedule and budget everything with the bank. The good news is once it’s done, you only need about 10 minutes to review things.
- After a month or so, you can close the old accounts and review your process. Keep your old accounts open to make sure you haven’t skipped out on any irregular bills like life insurance. Once things look clear, go ahead and close the unnecessary accounts. You don’t want to get any fees from inactivity.
Once you’ve completed all the necessary steps and requirements to merge your accounts, the only thing left to do is maintain good financial health. A good way to do this would be to participate in “money dates” where you take your partner out or stay in and talk about your budget.
Don’t just talk about the problems, celebrate the victories you’ve had regarding your finances and the process will be much easier. With our guide, you’ll be experts at budgeting in no time! If you’re interested in more posts like this, check out our list of Bank Guides and the Best Bank Rates, here on HMB!
Jay Warra says
The 50/30/20 rule is a good starting point to budget your money. But it’s not for everyone. The higher your cost or living vs your income, the more difficult it’ll be to cover your needs/essentials with 50% of your earnings. Senator Warren crafted this rule from her own vantage point, but I personally don’t think the rule fits most people.