Originally created 03/03/03

How do my fiance and I prepare to merge our finances?

Q: I'm getting married later this year. How do my fiance and I prepare to merge our finances?

A: In short, the answer is to start talking about it.

Set aside time when you and your fiance will discuss your individual financial situations, including how much debt and savings you each have. You will also want to talk about your values toward money and your financial goals for the future. And, of course, be prepared to talk about finances throughout your marriage.

"You have to have a conversation about money. It is an important thing to talk about before marriage, much like (talking about) 'Do we want to have children? Where do we want to live?'," said David L. Bach, author of "Smart Couples Finish Rich."

"It doesn't have to be complicated," he added.

Bach advised that engaged couples ask each other questions about how their parents handled money. Ask questions such questions as: Did your family talk about money at the dinner table? Did your family have credit card debt? A savings account?

"You learn a lot about how your partner is going to act (about money) when you ask these questions," Bach said.

You also need to share information about your finances. Make a list of each of your assets, including savings accounts and 401(k) plans, and each of your liabilities, such as credit card debt or college loans.

Next, talk about to what extent you will combine your money. Will you have joint accounts or maintain separate ones?

Also, be aware that many states consider assets obtained during a marriage - such as investments, earnings or inheritance - to be the joint property of a couple, even when separate accounts are kept.

Many financial planners recommend that couples have joint household checking and savings accounts along with separate individual checking or savings accounts. Experts generally advise that the bulk of the couple's earnings be deposited in the joint accounts. But they also say that it is important for each person to have their own smaller accounts - mostly for the peace of mind and security of knowing you have your own money set aside to do with as you like.

"Each person needs to keep some of their own money that they don't need to be accountable to anyone for. And, they shouldn't be looked at as holding back," said Patricia Jennerjohn, head of Focused Finances in Oakland, Calif. "It is psychologically necessary, and that's OK."

You'll want to make some purchases - on clothing and gifts, for example - without having to consult your spouse, Jennerjohn said. And, you'll want to have your own credit cards to maintain your own credit history.

Next, talk about policies you each have in which you have named a beneficiary. And, right before your wedding, change your insurance policies and retirement accounts to designate your future spouse as the beneficiary. Often couples forget about this until years into their marriage, Bach said.

Finally, start talking about your financial goals and how to achieve them. For example, do you want to buy a house, and if so, when?

And discuss how to prepare for those goals.

Bach suggests engaged couples get copies of their credit reports to see if there are any inaccuracies or problems that need to be addressed. One place to order your reports is at myfico.com, which issues a combined report from the three credit rating bureaus for $12.95 per report.

Bach said, "One of the first things (newlywed) couples want to do is buy a home. And, typically, the first time you figure out that one of you has a credit problem is when you apply for a mortgage. That is not when you want to find that out."


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