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When it comes to managing money, couples have a choice: combine all of their accounts, keep them entirely separate, or strive for something in between.
But what is normal?
About 43% of couples who are married, in a civil partnership or live together have joint assets, according to a new survey by CreditCards.com.
Baby boomers are the most likely to only have joint accounts, at 49%, followed by Gen Xers, at 48%, compared to just 31% of millennials.
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Meanwhile, 45% of young millennial couples aged 26-32 keep their money entirely separate, compared to just 20% of Gen Xers and 14% of baby boomers who do the same.
Experts say there’s usually no right or wrong way for a couple to manage their assets.
“Whichever answer is correct is the one that allows for the most harmonious relationship between two people along the way,” said Jesse Sell, certified financial planner and managing director at Prevail Financial Planners in Stillwater, Minnesota.
But whichever way couples choose, there are a few key tips they should keep in mind.
Make communication a priority
Couples who keep their accounts separate may be more likely to hide financial secrets from their partners, according to Ana Staples, credit card expert at Bankrate.com.
Even those who choose to pool their money would benefit from setting aside time to discuss the state of their finances and where they would like to go.
“It’s the kind of topic that makes people vulnerable, maybe a little defensive, because nobody’s perfect when it comes to finances,” Staples said. “Everyone has their own problems, their own fears.”
Ideally, a formal conversation should take place at least once a year, Sell said, so couples can make sure they’re always on the same page.
“Money can be a very emotional topic,” Sell said. “It’s important to talk about it regularly, because if it’s not done intentionally, it kind of gets pushed aside and never talked about.”
Be on the same page with ambitious goals
While couples can strive to consolidate all of their assets into joint accounts, there are some areas they will need to keep separate, namely retirement accounts.
Many workers have a 401(k) plan or other employer-sponsored plans offered through their jobs. Individual retirement accounts, which can be opened independently of an employer, also do not allow joint ownership.
Still, couples should make sure they communicate clearly about what they’re both doing when it comes to investing for retirement, so they can achieve retirement and financial freedom together. said CFP Jennifer Weber, vice president of financial planning at Weber Asset Management in North New Hyde. Park, New York.
Couples should strive to defer 15% of their combined income into retirement, she said, while 20% or more would be more ideal.
“The more you save and invest, the better off you are in the long run,” Weber said.
Couples should also make sure they’re on the same page with 529 college savings plans they’re investing in on behalf of their children. Notably, these accounts must also be in the name of a single adult.
While couples can enter into a relationship with their own investments, they should open an after-tax combined brokerage account to save for goals that are five years or more away, Weber said.
Additionally, couples should strive to have at least six months of living expenses set aside in an emergency fund.
Importantly, couples should make sure they update their beneficiaries for all of their accounts as their relationship status changes or new children enter the family, she said.
“The biggest piece of advice I have is to have really open and honest discussions with each other,” Weber said. “There’s no right way, there’s only one way to do it.”