Jan 9, 2017
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How to Manage Bank Accounts When You're Married

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Money management within a marriage can be a delicate task. While some couples seem to master financial cooperation with ease, others clash over spending styles, financial independence, and where and how funds should be spent. Of the many dimensions to marital money management, decisions about banking are among the most important. Choosing the right type of accounts for yourself and your partner will go a long way towards avoiding conflict and building financial security.
The following steps are ideal for newlyweds who want to start with a firm financial foundation, but they can also help couples who are often at odds over money, or who simply want to take stock of their banking approach and accounts in light of the new year..
Consider Your Respective Banking Styles and RolesJust like any other issue in a relationship, open and honest communication is key when it comes to where money should go and who should manage it. Consider your respective availability, interest, and aptitude in han..

Money management within a marriage can be a delicate task. While some couples seem to master financial cooperation with ease, others clash over spending styles, financial independence, and where and how funds should be spent. Of the many dimensions to marital money management, decisions about banking are among the most important. Choosing the right type of accounts for yourself and your partner will go a long way towards avoiding conflict and building financial security.

The following steps are ideal for newlyweds who want to start with a firm financial foundation, but they can also help couples who are often at odds over money, or who simply want to take stock of their banking approach and accounts in light of the new year..

Consider Your Respective Banking Styles and Roles

Just like any other issue in a relationship, open and honest communication is key when it comes to where money should go and who should manage it. Consider your respective availability, interest, and aptitude in handling the family accounts, and whether one or both of you will be involved. This decision may be shaped by the degree of spending independence you each desire and the level of trust you share. You should also compare your banking habits: one person might rely on traditional brick-and-mortar institutions, while the other may prefer online and mobile banking. Because every relationship is unique, every couple will likely end up with a slightly different financial arrangement.

Joint or Separate Accounts?

One key objective of your financial heart-to-heart should be to decide between creating a joint checking account or to keep two separate accounts. For many couples, a joint account makes the most sense. Consolidating all your deposits and withdrawals in one place simplifies financial management, and also ensures the largest possible balance for any one account, which can reduce fees and maximize interest and account features. Additionally, if both people know how much money leaves the account each month, it becomes much easier to avoid overdraft situations —always a concern with joint spending.

Other families may value personal independence more than those pluses. For them, maintaining individual checking accounts allows each partner to spend with a level of independence, including on personal purchases that the other might not be enthusiastic about. If you choose to take that route, it's wise to share monthly statements with one another, which minimizes the possibility that one partner will feel blindsided by the other's decisions.

Tailor Automatic Transfers to Your Account Strategy

All banks allow you to establish recurring automated transfers to and from your accounts. Such transfers can help you replenish your funds, pay bills on time and build your savings without conscious effort on your part. If you’ve opted for individual accounts, you’ll need to assign the various deposits and payments to the appropriate accounts. You may decide simply to split everything proportionally, or establish some combination of the two.

Whether you have two checking accounts or one, automatic transfers can lighten your administrative burden at the end of the month, giving you more time to focus on other tasks such as reviewing your transaction history or preparing next month's budget.

Commit to Building Savings Together

Since checking accounts yield little if any interest, they’re poor choices for rainy-day savings. Instead, consider making an interest-bearing savings account part of your family’s financial setup. Having a reserve to cover three or four months of expenses can be a lifesaving cushion in unexpected situations.

That said, current rates aren't comparable to the potential earnings from investment; families who are comfortable with higher risk may choose to leave at least a chunk of their emergency savings in a vehicle such as a mutual fund. Such an option has the potential to earn more than a savings account, along with, alas, the possibility of earning less should the investment go south.

As a rule, a single savings account is best for many families. Unlike checking accounts, savings accounts are supposed to have very few withdrawals, so it may be easier for couples to share a savings account as opposed to a checking account. Having two incomes also lightens the burden of saving, so that you'll reach your goals much more quickly than someone on their own.

However, if you plan to send any kids to college, you want to add an additional savings account to help cover the ever-rising cost of post-secondary education. Many banks offer specific long-term savings accounts for college savings, with unique terms that maximize return and penalize withdrawals.

The article How to Manage Bank Accounts When You're Married originally appeared on ValuePenguin.

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