Financial Planning Tips for Married Couples

"Hi there, we're back on Expert Village, thanks for watching. Today we're going to talk about a very sensitive subject and that is marrying finances. You're getting married, well congratulations, but how do you plan to integrate your portfolio with your spouses or is that even something you're considering at all. Really, it's important to sit down and discuss these types of things with your spouse before entering into your marriage. It doesn't have to be an uncomfortable subject, it can be very matter of fact, but it's important to talk about this before you get married so the expectations are clear. Today we're going to go over a couple of bullet points and this is, one is, disclosing what you have to your spouse, one is, how many pots of money will you have and one is determining what your common financial goals are and what your separate goals are. So. we'll get into that. Show me the money, sit down with your spouse and disclose your finances with them. Share how much you've invested, how much debt you have, what type of accounts you have and let them show you theirs. They only way to be a partner in a marriage is to share this information and figure out what your common goals are and what your separate goals are and then put together a game plan. For example, say you and your partner collectively earn $100,000.00 per year and you both decide you want to set aside ten thousand dollars for retirement and ten thousand dollars to buy a house. Well, collectively, that's twenty thousand dollars that needs to be saved, so you need to look at your budget and figure out, out of the hundred thousand dollars, how much of that will be spent. For example, say you and your partner have a hundred thousand dollars a year that you bring home collectively and you decide you want to spend ten thousand dollars saving for a house and ten thousand dollars on retirement, that leaves you eighty thousand dollars in other expenses to meet your obligations each year, this is a common goal. Next, you should discuss how many bank accounts you want to have. Do you want to have joint accounts or individual accounts. Basically you can break it down to between a one pot system, a two pot system, or a three pot system. A one pot system is just having a joint account where everything goes into. This is probably the hardest of the transitions especially if two people are both use to keeping their own accounts separate. I would advise maybe transitioning into something like that first, instead of diving head in. The next is the two pot system. That's just keeping your assets separate and segregating the type of bank account, so each one of you. The second pot system is simply keeping your own accounts, he keeps his, she keeps hers, and you keep your accounts separate. You need to have discussions about making big investment purchases though, such as buying a home, and how those assets should be titled. Then, there's a three pot system. Personally, I think the three pot system works the best. It's having a joint account for joint expenses and separate accounts for each one of your individual expenses and goals. This is the best way to transition, I think makes the most sense and will cause the least amount of stress on your relationship."