With wedding season upon us, now is the time that many couples are getting serious about whether or not to merge finances, and how to do it.
Recent research from TD Bank found that 82 percent of Americans in serious relationships maintain joint bank accounts with their partners, but also that 42 percent of such individuals have separate accounts in addition to their joint accounts.
There is no one right way to manage money with your partner. That being said, there are some things that every couple should take into consideration as they approach marriage and go about exploring their financial options.
Find a bank that works for both of you.
TD Bank research found that Americans consider convenience to be one of the most valuable aspects of their financial institutions, specifically regarding bank locations, ATMs and hours. Therefore, when merging finances with a partner, it's important to have an open discussion about your schedules and habits. Are there locations that are convenient to where both of you work? Does one or both of you have a job that would make evening banking hours a big benefit? Finding a bank that is convenient for both of you may not be easy, but our research shows that it's very important.
Consider how merging finances may change your financial situation.
It may seem obvious, but it's important to consider that when you merge finances with your partner, combined incomes could change your financial situation. If you're fortunate enough to maintain higher minimum balances in a joint account with your soon-to-be husband or wife, then you should explore premium bank accounts. At many banks, such accounts allow customers to reap the benefits of high-end features like paying interest on your balance and reimbursing for out-of-network ATM fees.
Same-sex newlyweds should pay particular attention to this advice, as a 2012 study found that LGBT people tend to earn more than their heterosexual counterparts. Premium joint accounts may be the best option for same-sex couples who have the ability to keep a higher balance in their accounts.
Choose accounts that are aligned with your aspirations.
For many couples, marriage triggers other significant life events, like buying a home or having children. If you and your partner are heading towards these major milestones, you should take them into consideration when choosing a financial institution or bank account. For example, if home buying is in the near future, try to find a bank that offers rate discounts to customers who link a checking account with a mortgage. Doing so could help you save hundreds of dollars a year.
Have an open conversation about how to manage your money.
As I previously mentioned, there is no one right way to manage money with your partner, and also no one right time to merge finances. In fact, TD Bank research shows that millennials are starting joint accounts earlier in their relationships than previous generations: While 88 percent of people 55 and older waited until marriage to merge finances, only 70 percent of 18- to 34-year-olds did the same. Millennials are also increasingly banking online and with smartphone apps.
If it makes sense for you and your partner, take advantage of these technological banking advancements, which allow you to monitor your balance and review account transactions anytime. At many banks, you can even set up email alerts so you won't be caught off-guard if one of your partner's transactions leads to a low balance. In addition, online bill pay also can help manage your joint monthly costs, giving all account holders one place where they can review their monthly financial obligations.
Carefully choosing the financial institution and bank accounts that make the most sense for you and your fiancé can help to ensure a financially successful shared future. Open conversations on preferences and needs are crucial to this process, so be sure to have them before your big day. There might not be one right way for every couple to merge finances, but there is a right way for you and your husband- or wife-to-be.
The most important tip cited by many wedding experts is to create a budget plan before you purchase anything -- and stick to it. Wedding experts Susan Southerland and Samantha Goldberg agreed that couples need to sit down and figure out exactly what their wedding "must-haves" are and how much they want to spend. "If they don't have a level head and they haven't started thinking, 'Here's what I can spend without getting into trouble,' they wind up going with their heart and not sticking to it," Southerland said. And, if you follow your budget, you shouldn't have any problems with overspending. "If they have a blueprint, there won't be a reason to feel like they're going to go over, because they've been on this plan the entire time," Goldberg said (download her wedding budget tracker here).
By cutting the guest list, you can save exponentially on things like flowers, tables, and square footage, said wedding planner Marcy Blum. You'll have a better event if you invite fewer guests, rather than eliminating services like an open bar and proper facilities. "It would be much better to cut the guest list than cut the wait staff. There's no point in doing something halfway," Blum said.
Money-saving expert Kendal Perez offered this little-known tip: buy used gift cards from stores you'd like to purchase wedding items from at GiftCardGranny.com. When shoppers receive a gift card to a store they don't like, they can sell the card on GiftCardGranny.com for less than face value -- meaning you can buy the card and save up to 30 percent. For example, there are cards available from 1-800 Flowers, Tiffany, and wedding dress retailers like J. Crew. "It’s a different way to save money without having to shop sales, but if you can couple that with something on sale then you’re getting even more savings," Perez said.
Matthew Robbins, author of "Matthew Robinns' Inspired Weddings," cautioned couples against renting too many fancy items, and instead recommended mixing in just a few special pieces with items already included in your venue. For example, rent a unique water or champagne glass to add something special to the table, or use a simple cloth from the venue for the tables and rent a beautiful overlay or runner to dress things up. "Choose wisely and consider rental items as a special accent to embellish what your venue provides," Robbins said.
Holidays are more expensive, plain and simple, said wedding planner Yifat Oren. "You might think it's easier for people to get time off work, but they'll be spending more money all around on travel and accommodations, not to mention the challenges with availability during high season times," she said.
Sign up for all your potential vendors' email lists and follow them on social media in order to get the first scoop on deals, contests, and freebies, said Sharon Naylor, wedding expert and author of "The Bride's Guide To Freebies." You'll hear about clearance sales, "Pin It To Win It" contests on Pinterest, trunk shows and more deals you wouldn't have known about otherwise. "If you’re following them and keeping a good eye on them, you can cash in on some great stuff," Naylor said.
Don't feel like you need to spend money on things you don't really need but feel like you have to have, said money-saving expert Kendal Perez. Skip wedding traditions that seem necessary, like programs and favors. "I don’t think I've ever kept a wedding favor. Those things are unnecessary expenses," Perez said. "Make sure you're planning the party you want and you're not including things just because everyone includes them."
Vendors will sometimes give discounts to clients they enjoyed working with and, if you ask, may agree to give you freebies or substitutions, said wedding expert Sharon Naylor. But don't forget to be nice! "You cannot be a steamroller and you can't demand it and you can't say, 'Well, I heard you gave my friend a free [food] station so what am I going to get?'" Naylor said. "When vendors don't like you you're not going to get as many freebies."
There's no rule that you must have a pricey dinner or cocktail hour for all of your guests, said wedding planner Xochtil Gonzalez. As long as you give guests something to eat and drink, that constitutes a party. Hire a food truck or consider holding a brunch on a Sunday afternoon. "If you know you have a fun crowd that’s going to dance no matter what if the music’s good and they’ve had a couple drinks, there’s no reason to force yourself to just have a nighttime party," Gonzalez said.
Instead of registering for kitchen supplies you don't really need, wedding planner Samantha Goldberg said you can actually register for wedding items such as a videographer or upgraded room on your honeymoon. Many vendors will make cards you can put in your invitations explaining your request to your guests. "You'd be surprised -- everyone pitches in here and there and suddenly you now have this money to have something you thought you wanted but weren't able to afford," Goldberg said.