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Joint bank account: banking based on your life stage

Congratulations, newlyweds - you and your spouse have just committed to each other till death do you part. Now you just have to make sure that sharing your finances doesn't kill you -- or at least your marriage.

Getting married typically means that your finances become linked, but that does not necessarily mean a joint bank account is the right move. Young couples in particular are likely to find that getting married is just the first in a series of life changes that affect their banking needs. Learning to adjust your banking based on your life stage should not only help you financially, but it could make the course of your marriage run more smoothly.

Sharing financial details -- a new level of intimacy

As you and your spouse have gotten to know each other, you may have begun to pour out your hearts and share your dreams, desires and fears. Now comes the tough part: sharing financial details.

Ideally, an open discussion of finances should take place before a couple gets married, but if not then it should take place as soon as possible after the wedding.

First comes a status discussion -- how much is each of you is making, how much are you spending, how much debt do you each carry, what your credit scores are and what savings and other assets you have.

That will tell you where you are starting from, and you can then decide where you want to go. This would entail a discussion of what kind of lifestyle you envision both now and in the future, specific plans such as having kids, buying a house and other financial commitments, and how you expect to save for retirement. Then you need to get down to the detail of budgeting to make it all happen.

As you start to talk finances, it can be helpful to share some history about what kind of background you come from and what financial experiences have shaped you. This should help you understand each other's financial decision-making a little better.

Should you say "I do" to a joint bank account?

These early-stage discussions should result in you formulating some sort of household budget. Does this mean you are ready to blend your finances into a joint bank account?

Not necessarily. If you are still at a stage where you are mostly living paycheck-to-paycheck and don't carry huge balances in your checking accounts, you may find that joint bank accounts are hard to coordinate. If you don't have much of a cushion, one miscommunication about a transaction could lead to overdraft fees.

At this point, it is sufficient that you each know how the household's financial responsibilities are split between you. You can then allow each to maintain a separate account to manage those responsibilities.

Banking based on your life stage

Of course, the goal probably isn't to live paycheck-to-paycheck with a low checking account balance for long. Your financial situation should evolve, and as it does your banking needs change based on your life stage. Here are some examples:

  1. Starting out: Minimize checking account fees
    Early on, if you have little savings but use checking accounts to manage your day-to-day finances, finding a checking account with low or no monthly maintenance fees should be your first priority. Online banking increases your chance of finding a checking account with no monthly fees.

  2. Getting ahead: Start to save money
    Combining earnings and any subsequent raises either of you get are golden opportunities to start saving money. When you set aside money in a savings account, high interest rates rather than low fees are the most important consideration in choosing a bank. This may entail putting your savings account in a different bank from your checking account.

  3. Growing investments: Set goals for savings
    Start to do some long-term planning, and as you do, begin making some long-term investments. Participating in retirement plans at your employers can have tax benefits and other advantages, and if you have additional after-tax savings beyond what you may need for emergencies, consider opening an investment account with a bank or brokerage firm.

  4. Settling in: Decide on separate vs. joint bank account
    Checking accounts, savings accounts, retirement accounts - which should be joint and which should be separate? Checking accounts have regular transactions that can be hard to coordinate between two people, but a joint savings account should be less complicated. Retirement accounts are generally in one individual's name, but any additional investments can be held jointly. Joint or separate, keep each other informed about the status of your accounts.

Joint checking account: Whose bank do we go with?

Whether it is a joint savings account, checking account or other type of shared account, when it comes time to pool your resources, whose bank do you choose if you have been banking separately up to this time?

Rather than debate your-bank-against-my-bank, don't limit yourself to either one. Think about what type of account you need, then shop for the best terms for that type of account - such as low fees for a checking account, or a high interest rate for a savings account.

That way, you won't be limited by your past, but ready to make a fresh start for the future. That's a sound basis for both your marriage and your finances.

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