Valentine’s Day is around the corner. Are you thinking roses? Chocolate? A nice bottle of wine? At Cobblestone, we have other romantic ideas in mind. Namely, how to create a shared financial life with your partner.

No, it’s not as romantic as a candlelit dinner. But proper financial planning with your partner is truly an act of devotion. So read on to see our recommendations for setting up and living a shared financial life, as well as ensuring that people you love most will be taken care of.

Setting Up A Shared Financial Life

Before saying “I do,” consider the following checklist for combining your financial life with a partner.

• Gather all financial details. What are your bank accounts, investment accounts, retirement account, debts, total yearly income?
• Combine your costs. What are you both spending money on? Can you combine anywhere? Do you have to expand anywhere?
• Talk about it. All relationships are built on communication. We recommend you set aside dedicated time to discuss your combined finances.
• Pick a method of combining. Will you be fully combining finances, e.g., living out of one bank account? Partially combining, where you share some expenses but not others? Or will you keep finances as separate as possible? The decision is yours.
• Keep, close, or open accounts. Depending on your method of combining, decide which accounts you’ll keep, which you’ll close, and which new ones you’ll have to open.
• Keep checking in! Your initial decisions might feel wrong after living them out. Don’t be afraid to revisit and reassess your choices.

Living a Shared Financial Life

Combining your finances is a great start. But sharing a financial life doesn’t stop there. Here are some major considerations for people sharing a financial life. 

• Family planning is a deeply personal topic. You must plan for everyday expenses in your monthly budget. But don’t forget to plan for big expenses like education as well. A 529 College Savings Plan can be a great place to store educational dollars.
• Taxes can get better or worse after getting married. Some benefits could include lowering your overall tax bracket, using one spouse as a tax shelter, increasing IRA contributions, increasing charitable contribution deductions, protecting your estate, and even saving time on tax returns.
• Health insurance is an ever-growing aspect of our financial lives. Thankfully, getting married helps. Compare your plan with your partner’s to find the most cost-effective coverage for your family.
• Ownership of homes, cars, etc. can be a murky topic since both shared ownership and solo ownership have their perks. Work with a trusted financial advisor to understand which is best for you.
• Avoid behaviors like financial micromanagement, money secrets, and inequities in spending. Money arguments are the second-leading cause of divorce. Maintain an open and transparent financial conversation.
• Remember the small stuff! Many simple expenses like gym memberships and Netflix accounts can be cheaper for couples than for two single people.

Ensuring Your Loved Ones are Taken Care Of

We don’t mean to spoil your Valentine’s Day. But we all need to ask, “Will my loved ones be taken care of after I’m gone?” Here are some ideas to consider.

• Life insurance is a terrific safety net. For some people, term life insurance makes more sense than whole life insurance. Unsure how much to buy? There are terrific online calculators that provide a rough idea.
• Social Security benefits frequently get passed to your surviving spouse. Make sure they know how to take advantage after your passing.
• Wills and trusts are extremely helpful and need to be clearly defined. You can prevent a huge headache after your death by getting these documents in place now.
• Beneficiaries of your investment accounts, especially retirement accounts, should also be clearly identified.
• Create a complete “what to do” list of your entire financial life. If you pass, what should your partner do? Where are the important papers? Who should they talk to, and in what order? Where is the money, and which accounts should they wait before accessing? Don’t leave your loved ones stranded.
• Advanced directives, such as a power of attorney for financial decisions and a health care proxy/living will for health care decisions, can provide decision-making powers to your spouse or someone else should you be incapacitated and unable to act.

Ok – now go enjoy that chocolate and wine! But come February 15th, don’t forget to give your financial partnership a little TLC as well.

Registration with the SEC should not be construed as an endorsement or an indicator of investment skill, acumen, or experience. Investments in securities are not insured, protected, or guaranteed and may result in loss of income and/or principal. Nothing in this communication is intended to be or should be construed as individualized investment advice. All content is of a general nature and solely for educational, informational, and illustrative purposes.

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