How To Merge Bank Accounts As A Newly Married Couple
When it comes to merging bank accounts as a newly married couple, there are quite a few things to think about: deciding on how you will set up your new bank accounts, choosing where to have your bank accounts, opening up those new accounts, updating where your paycheck goes & much more. This blog post cover all this.
Deciding on how you will set up your bank accounts
There are tons of ways to go about this, but here are a few ways to get your mind thinking. The good thing is if you decide to do it one way but after a year you don’t like it, you can restructure it. There is no one right way. I have worked with couples who merged finances right when they got married & it works perfectly. I have other couples who have decided to keep their own finances separate & they have success as well. There is no one right answer, there is just what is right for you.
Option 1) All Together
This is pretty straight forward. You & your spouse have decided to merge all your finances together. Same savings account. Same checking account. Same emergency fund account. The potential negative of this is if you have different spending habits which could create resentment or negative emotions.
Option 2) The Middle Route
This is where you combine options 1 & 3. You have aspects of joint accounts as well as separate accounts. An example of this would be having a combined savings & checking account but also additional separate checking accounts. The potential negative of this is having to manage more bank accounts + the separate checking accounts may feel like “allowances” for spending, which may come off wrong to some people.
Option 3) Totally Separate
This is where there is no commingling of finances. What is his is his. What is hers is hers. For some couples, this is where they prefer to start when “merging” finances. The potential negative of this is always having to split expenses, which can get annoying after a while. Also, when it comes to retirement planning, this can be hard to track your goals together for retirement investing.
Again, there is no right way. This is something that can change as you progress in your relationship & goals. Maybe you start out totally separate, then after a couple years you decide to go the middle route. Or maybe you choose the middle route at the start & stay there forever. It is all what works for you.
Opening up new bank accounts
Once you decide on the setup, now comes time to open the accounts. A few things to keep in mind with this step:
A joint bank account means if one spouse dies, the surviving spouse becomes the sole owner the entire account. This is important when it comes to estate planning.
You can open joint accounts before a last name change, however keep in mind it will be a task to change after the legal name change.
If you have individual bank accounts, for estate planning purposes, be sure to add a POD (payable on death) to your spouse. This means if something happens to you, the funds in the bank account will directly go to your surviving spouse.
With a joint bank account, both owners have the authority to make transfers, withdrawals or liquidate the entire account without the authority of the other spouse.
Updating your pay stub/income sources
Now that you have your bank account structure set up & you have the accounts open, the next step is funding the accounts. For most people, that will come via their job. For others, it may come from a business you own or a 1099 paycheck.
Note: If you are getting paid via 1099 or pay your own taxes, be sure to have a separate bank account to hold money for your taxes.
This is a pretty easy update. For me, I just told my payroll department that I wanted to change where my direct deposit paycheck went. I filled out the new information (name of bank, account number, routing number) & by next pay period, my paycheck was being sent to my new bank account.
Changing your tax set up
I am not going to spend too much time on the tax changes that come with being married (and filing jointly on your taxes) in this blog. That will come in a future post. However if you are going to be filing your taxes jointly, you get better tax rates vs when you were a single filer. While you are talked to your payroll team, if you plan to file jointly, also let them know you would like to change your filing status. Like I said above, taxes are a whole different conversation, so this is just the tip of the iceberg on the tax talk, but it’s a quick update the make.
Rerouting the bills
Once you have your main checking account funded, now comes time to swap the bills to come from this account. Example of some bills that are auto-withdrawn:
Rent/Mortgage
Utilities
Insurances
TV Subscriptions
Phone Bill
Internet Bill
Gym
And other auto-withdraw items
Another thing to update is other financial instruments that use ACH from a now old bank account. Some examples include:
Credit card payments
Investment account linking
Venmo/Cash App/Zelle
This step can take some time, but once you get it done, it feels good to complete it.
A good lesson here is to either “pre-fund” the new account that is paying the bills OR keep enough in the old one to pay one more month of bills while you give your new bill paying account one paycheck (or two) to get funded.
Monitoring your set up
You have decided on your structure. You opened the necessary bank accounts. You updated where your paystubs go. You updated where your expenses come from. Now, the final step, which is to monitor your set up. Like I said at the beginning, maybe you decide that you want to combine finances all together but after a few months you decide you like the middle route approach. It is all about finding what works best for you and your spouse. Personal finances are just that… personal. What works for your parents or friends may not work for you and that is OK!
Thanks for reading & I hope you found value in this post!
-Kolin
Disclaimer: The content provided in this blog post is for educational purposes only and should not be considered as financial advice. While every effort has been made to provide accurate and up-to-date information, the content on Money Matters For Two is based on personal research, opinions, and experiences. The financial landscape can change rapidly, and what may be applicable at the time of writing may not necessarily be applicable in the future.
Any financial decisions you make based on the information provided here are entirely at your own risk. Money Matters For Two encourages readers to do their own research and, when necessary, seek the advice of a qualified financial advisor or professional to ensure that any financial choices are appropriate for their individual circumstances.