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Money management, Money savvy

When Couples Should Combine Their Finances (and When They Shouldn't)

On Behalf of Veitengruber Law | Sep 28,2021

Every relationship has its challenges, but one extremely common issue is finances. When two people combine their lives together, there are a lot of decisions to make surrounding money. Splitting bills, shared bank accounts, investments, and spending habits are decisions that all suddenly must be shared with another person. It is important for couples to be on the same page when it comes to finances, but that doesn’t necessarily mean couples should share all of their accounts and finances. Here are some things you should consider combining with your spouse—and some thing you might want to keep separate.

Finances Couples Should Combine:

1.   Car and Homeowners Insurance

You could save money by combining your car insurance with your spouse, with some policies saving you up to 20% on your monthly bill. Many car insurance companies offer discounts for putting two or more cars on one policy. On the other hand, while you may not necessarily save money by adding your spouse to your homeowners insurance, it is another thing you should think about combining. Even if you or your spouse is not included in the mortgage, you want to make sure both of you are able to access the benefits should anything happen to your home.

2.   Emergency Funds

When you are saving for emergencies, you are likely thinking of total household expenses and issues, not just your individual expenses. If you are sharing responsibility of a household with a partner, it is a good idea to combine your efforts in saving for an emergency. This way, if someone loses a job, a member of the household has a medical event, or a natural disaster strikes, both you and your spouse have access to the funds needed to get your household through the emergency.

3.   Tax Returns

While filing jointly isn’t always the best option for all couples, married couples who file together will enjoy a yearly tax credit that can make it worthwhile. In 2020, a married couple filing together was allowed a $24,800 deduction, while single filers were only able to take a $12,400 deduction.

Finances Couples Should Keep Separate:

1.   Life Insurance

You can’t actually combine life insurance policies, but you should absolutely both have life insurance policies with the other listed as the beneficiary. Planning for the future should include a contingency for if you aren’t able to personally be around to help pay for bills and household expenses.

2.   Personal Savings

Even after you say “I do,” it's a good idea to keep a separate savings account for yourself. You can use this account to buy surprise gifts for your spouse—or as financial protection in the event you need to leave the relationship.

3.   Retirement Investments

Your retirement investments are essentially the culmination of a lifetime of savings. They are meant to carry you through your golden years without having to worry about finances. If you want to share these funds with your spouse, you’re not alone and many couples use these funds together. But be wary of giving your spouse direct access to these accounts. In fact, you may want to consider a prenuptial agreement to protect these investments in the event the relationship goes south. This is a common way to protect your assets. You can always name your spouse as the beneficiary of the accounts in the event of your death if that is in line with your wishes.

Sharing a life together doesn’t have to mean sharing all of your finances. While there are some situations in which combining financial efforts is a good idea, there are other circumstances where it makes more sense—and will protect your best interests—to keep things separate.



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