Tips for merging money with your mate

by Center for Personal Finance editors

McLEAN, Va. (5/17/06)--Sharing credit reports before a fiscal union isn't romantic, but it's one way to start the discussion about the financial baggage--both good and bad--that each person brings to the relationship (USA Today May 5).

There's no cookie-cutter approach to merging finances. Some couples decide to keep all their money separate, while other couples prefer joint everything--checking accounts, credit cards, and investments. The key is to blend financial lives in ways that satisfy both individuals.

Begin by asking questions:

What are your spending habits? Should finances be separate, combined in one pot, or a combination of both? Who will pay the bills, and how? Do we live in a community property state (which means that married couples legally own all assets together and are also jointly liable for any debt acquired after the marriage)? Is there a limit on how much each person can spend before consulting the other? What kinds of expenses should be paid for with plastic? What are our financial priorities?

To keep checking and savings accounts from passing through probate, put both spouses' names on those accounts; if one spouse dies, the account will go directly to the other person. A recent poll conducted by USA Today/CNN/Gallup of 1,001 adults revealed that 89% of married adults have at least one joint account.

Experts advise against ditching your own credit card--keeping a separate account makes it easier to get credit if your spouse dies or the relationship ends. And if your investment style differs significantly from your partner's, consider keeping separate brokerage accounts, which allows the adviser to review both persons' portfolios and see whether--as a couple--you're properly diversified. However, consolidating your brokerage accounts may lower your investment-management fees. Weigh the pros and cons.

Get one free credit report each year from each of the major credit reporting agencies--Experian, Equifax, and TransUnion--at annualcreditreport.com. Notify the credit bureaus if you change your surname so they won't mistakenly drop accounts from your credit record that were opened under your unmarried name.

For more information, read "Prenups Clarify 'Yours, Mine, and Ours'" and "Couples and Money: Achieve Financial Harmony and Prosperity" in the Home & Family Finance Resource Center money savvy section.