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CNET
4 days ago
- Business
- CNET
You Don't Have to Combine Finances if You Get Married. Experts Offer Tips to Make It Work
JGI/Managing finances may not be a first-date topic but it's important to establish early on how you both want to approach money. As a married couple, managing money requires even more communication and shared decision-making. These negotiations can potentially be a bit more fraught if you want to maintain financial independence from your spouse. Financial planner Uziel Gomez said many couples he's worked with start out approaching money differently and never decide on a clear plan. "Clients often arrive with a system for managing their finances separately, which may have developed more by default than by design," said Gomez, a certified financial planner and accredited financial counselor. Combining finances when you get married is not a foregone conclusion. In fact, if you and your partner each have your own money management methods that work for you individually, keeping finances separate can potentially help you divide your budget equitably. Managing your own money can also offer you each more financial independence, which can become especially important if the relationship ends for any reason. We asked financial planners and legal experts to weigh in with tips to help manage separate finances when you're married. Read more: More Couples Should Have the Money Talk. Here's Why (and How to Do It) Discuss WHY you're keeping separate finances Household money management might feel like a sensitive subject but avoiding these conversations could leave you unprepared to meet major financial or life goals together down the line. Discuss why you each want to manage money the way you do, and set clear guidelines for what you'll each be responsible for and how you'll make big financial decisions like buying property and saving for retirement. Consider the implications of income disparities A difference in income could potentially lead to tension if one partner is reluctant to ask the other for help so it's best to get ahead of it, Gomez said. An income disparity between spouses can create conflict in any marriage but it can be particularly challenging if you want to maintain separate finances. One spouse might take on the responsibility of paying household costs while the other shoulders other responsibilities. But ask yourself: What does that mean for your finances if the marriage ends? How does it affect the way you plan for the future? Can you build personal savings or a retirement account, even if you're not contributing to household expenses? Discuss these questions with your spouse to make sure you're on the same page, especially as your incomes evolve over the years. Keep a shared account (or more) for shared expenses Gomez recommended that couples keep some shared funds even if most expenses are separate. Feed money into a shared checking account to pay household bills so those can be automated or deducted electronically without added complications. He also noted that building a shared rainy day fund can help cover unexpected expenses or if one spouse is unable to pay their share. It's important to discuss early on what the shared accounts will cover. Some common expenses you may want to include: Mortgage or rent Property taxes HOA fees Homeowners insurance Utiltiies Home maintenance If you have a shared account, you can still build your own spending and savings accounts separate from your spouse. This not only lets you shop without the stress of shared decision-making, but it also helps you maintain financial independence if the relationship ends. And this doesn't necessarily mean divorce -- if the partner who always manages the money dies, it could create additional stress for the surviving spouse if they don't have control of the accounts or a credit history to help them rebuild their finances alone. If you do share an account, make sure you both have access to review expenses and contributions to avoid any unwelcome surprises (like insufficient funds). What to do if you have (or plan to have) children If you're raising children (or plan to) with your spouse, keeping finances separated will likely require some additional work. This might be a good time to set up one of those combined accounts we just mentioned. The account could let you both contribute to day-to-day expenses as well as medical care, day care and education costs. Some accounts, like a health savings account or 529 plan, can only be owned by one person. If you want to keep these separate for your children, you could each set up your own plan or have one plan that each partner contributes to. If you don't have children yet but both want to have them in the future, setting up a "family" account for future child-care expenses is a smart move. If either of you brings children from a previous relationship to the marriage, setting up a separate account for just their expenses will likely make sense, especially if the child's other parent is still involved. Agree on how you'll file taxes Financial experts tend to recommend filing taxes jointly if you're married because it gives you access to perks only available to married couples. But joint filing could be complicated if you want to maintain complete financial independence from your spouse. Speak with an accountant about the tax implications of filing jointly versus separately so you and your spouse can decide together what works best for you. However you plan to file, also ask about tax deductions or credits tied to various household expenses, like mortgage interest, energy credits and home office costs, and take those into consideration as you decide who will pay for what. Know who owns what under the law Even if you maintain separate finances and purchase assets individually, those assets might be shared property under state law. Assets (and debts) acquired by either spouse while married are considered to be "community property" in nine states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. "Clients often face challenges when they discover that accounts or assets they believed were separate are considered shared marital property," said Nicole Sodoma, a family and divorce attorney. That could mean your savings, retirement accounts, home, and other assets and property belong equally to both spouses, regardless of who paid for them or whose name is on the account. A few other states let spouses opt into treating assets as community property, so pay attention to that decision when you get married. Community property is usually split 50/50 in a divorce unless you come to a different agreement. If you live in a community property state, Sodoma suggested that putting assets in a trust might offer some protection. But that depends on state-specific laws so work with a financial advisor and an attorney to make plans that work for you. Keep lines of communication open Your financial situation will change over the course of your marriage so maintain an ongoing discussion about money. Sodoma recommended a regular family meeting to check in on financial responsibilities, goals and priorities. This type of meeting makes space for conversations about money and it lets you keep the rest of your time with your spouse free from financial stress or questions. "Open and honest communication is crucial in any marriage, particularly when it comes to managing separate finances," said Gomez. "Establishing clear expectations and defining the roles each partner will play is essential for building a strong foundation for their financial future together."
Yahoo
20-05-2025
- Business
- Yahoo
Want to save and make more money? You might need to look inward. How to do it.
When Dr. Brad Klontz' maternal grandfather went to his bank one day, he discovered all of his money was gone. His bank was one of the thousands of financial institutions that failed during the Great Depression. He was so traumatized that he never put a dollar in a bank again. His daughter carried some of that risk aversion into her life, investing only in certificates of deposit, or CDs, and she felt ashamed of being poor. Growing up, Klontz internalized some of that shame and wanted to be wealthy. To get there, he decided that instead of being extremely cautious like his mother and grandfather, he'd go in the opposite direction. Staring at his $100,000 in student loan debt in his 20s, he sold his truck and used the money to buy a $500 car and invest the rest in one asset class in the stock market. Then the dot-com bubble burst and he watched that money fade away. 'I went from the most risk averse to the riskiest possible approach,'' Klontz, a certified financial planner and psychologist, said. "That's dysfunctional. It's not moderation.' Klontz says that he was following a "money script," a term he coined for the unconscious beliefs, often rooted in childhood, that affect your financial behaviors as an adult. 'For many of us, it's like a script that was written by somebody else and you're just reading it,' Klontz said. But just because financial habits are often first molded by things out of your control, it doesn't mean you can't change them. The first step to having a healthier relationship with money is understanding where you currently stand. Klontz's story is just one example of how people's attitudes toward money are passed down through generations and shaped by experiences or trauma. He calls his personal experience a 'dysfunctional pendulum swing.' It's something you often see when alcoholism runs in a family, he said. If a parent is an alcoholic, their child will either also become one or never drink a drop of it in their life. Helping people uncover their money scripts and rewrite them, Klontz said, has led to improved mental health. One study he conducted found people's savings rate increased 73% when they became more aware of their psychological relationship with money. The four main money scripts are Money Avoidance, Money Focus, Money Status, and Money Vigilance. Klontz offers a free diagnostic test to help determine yours. Some lead to better financial outcomes than others, but no matter your script, there are tips to help you build a healthier relationship with money. More: What to prioritize when making a budget? Tips on creating and sticking to one Those who are money avoidant tend to believe money is inherently bad or corrupting, according to Klontz' framework. Money avoidants might avoid thinking or talking about money, ignore financial statements, financially enable others, or overspend. Jack Howard, head of financial wellness at Ally Financial, discusses 'money stories' — a concept similar to money scripts — in her financial education workshops. She said she often sees parents hesitate to have conversations about finances with their children because their own parents avoided the subject. 'I'm hearing that in a lot of our classes. 'We didn't talk about money. It was taboo. It was seen as disrespectful,'' Howard said. Klontz' advises the money avoidant to schedule periodic money check-ins, financially support people and causes they care about, and to identify a role model who uses wealth to do good, to strengthen their overall relationship with money. Money vigilant individuals are cautious and concerned about their financial well-being. They save for the future, avoid unnecessary debt, and believe hard work pays off. 'The average American needs to get way more money vigilant,' Klontz said. 'That's just the bottom line.' But identifying with this script can lead to missing out on experiences due to fear-based decision making. Klontz said as a financial adviser, he's seen wealthy people struggle to spend their money even in retirement because they are used to being so vigilant. 'People who are really high on money vigilance may end up with the highest net worth,' Klontz said. But 'Are they happy? Can they sleep at night? Are they so vigilant around money that they can't spend it?' If that sounds like you, he advises you create a 'fun money' budget, check in with an adviser who will set your mind at ease, and set limits on how often you monitor your finances. Money focused individuals often believe money is the key to happiness and a solution to life's problems but also that no amount of money is enough, according to Klontz' framework. Klontz himself identifies with this script, but he also scores high in the money vigilance category. It's a duality he sees a lot in business professionals. 'The two go hand in hand,' he said. 'Why would you be so conscientious and concerned about it if you didn't want more of it?' But unchecked money focus can actually lead to lower net worth and higher levels of debt, as people try to buy happiness and prioritize work over relationships, research shows. Tips for the money focused include pausing before making a purchase to determine if you need it and realizing money can buy comfort but not connection. Giving both money and time to causes and people that matter to you can also help those who identify with this script. If you often tie your self-worth to your net worth, you may find the money status script familiar. Individuals who fall into this category may be a fan of outward displays of wealth and see them as a way to gain respect, according to Klontz' framework. Klontz said he likely would've scored high in this category when he was younger. When he started making six figures for the first time, he bought himself a luxury watch and a gold bracelet for his mother, even though he still had a significant amount of student loan debt. 'I don't know why I did it. I mean I did it because I heard there's a whole club when you're making money now and it's about luxury watches,' Klontz said. 'It's a signal, you know? 'Hey, I've made it.'' Howard said as a mom to a Gen Z child, she sees the younger generations buying things to showcase and achieve status on social media. Those social networks' influencers and ads can also lead to more impulse buying, she said. To avoid the most negative outcomes including overspending, compulsive gambling, and financial dependence on others, money status seekers should take a step back. Klontz advises them to pause before they purchase, schedule money check-ins, and take care of their overall health instead of only chasing financial goals. Reach Rachel Barber at rbarber@ and follow her on X @rachelbarber_ This article originally appeared on USA TODAY: Financial wellness benefits from self reflection. How to do it.
