Q&A: Different approaches to marital finances

Dear Liz: Thank you for mentioning that many couples like to keep their finances entirely or mostly separate. Our solution was to create a joint bank account just for paying joint expenses, such as rent, food, entertainment together, vacations and so on. We each funded this account proportionately, based on our income (for example, the person earning 65% of the total income contributed 65% of the funds). Expenses, such as gifts to our separate children, entertainment on our own, car payments and all personal expenses were paid out of our own separate accounts. Each year at tax time, we’d revise the proportion of the joint account, if necessary, based on our separate tax return figures. It was so simple and tension-free. This was a second marriage for both of us, and we never had disagreements about money.

Answer: Congratulations for finding an approach that worked so well for both of you. As you demonstrate, there’s no one right way for couples to handle their money. Some prefer to have everything in joint accounts, others keep everything separate, and most are somewhere in between.

Q&A: Handling money after marriage can be complicated. Mom and Dad should butt out

Dear Liz: My son just married. He and his wife are keeping totally separate finances, though he makes much more than she does. She is spending way more than she should on household items and services. Is this the new norm for relationships? What kind of professional do we contact that could help them with merging their finances?

Answer: You don’t contact any kind of professional. Your son and his wife can find help on their own. If your son starts complaining about his wife’s spending again, you might gently suggest that before changing the subject.

In answer to your first question, though, separate accounts aren’t the norm but they’re quite common. A 2018 Bank of America study found 28% of millennial couples kept their finances separate. Many prefer the sense of control and privacy that separate accounts offer.

But of course it’s still important for couples to work out budgets and joint goals together. That can take time, a lot of discussion and the willingness to compromise. It wouldn’t be fair for your son to dictate what they spend just because he makes more, just as it wouldn’t be fair for your daughter-in-law to purchase whatever she wants and assume he’ll chip in.

Again, however: It’s not your business, it’s theirs, and it will be better for all concerned if you keep out of it.

Tuesday’s need-to-know money news

Today’s top story: Be your financial Valentine. Also in the news: 44% of adults admit to keeping money secrets from a partner, most consumers have already broken their resolutions, and how to reset your finances after a breakup.

Be Your Financial Valentine
The best gifts you can give yourself.

44% of adults admit to keeping money secrets from a partner
Financial infidelity.

Most Consumers Have Already Broken Resolutions
Have you kept yours?

How to Reset Your Finances After a Breakup
Putting the pieces back together.

Monday’s need-to-know money news

Today’s top story: Should your student loans and your spouse’s get hitched? Also in the news: Investing vs paying student loans, the blunt truth about medical expenses, marijuana, and your tax returns, and how to figure out your finances when you’re single.

Should Your Student Loans and Your Spouse’s Get Hitched?
A look at the pros and cons.

SmartMoney Podcast: ‘Should I Invest or Pay Down My Student Loans?’
Where should your money go?

Blunt Truths About Medical Expenses, Marijuana and Your Tax Return
The IRS needs to chill.

How to Figure Out Your Finances When You’re Single
Making the budget that works solely for you.

Wednesday’s need-to-know money news

Today’s top story: Smart ways to establish credit in 2020. Also in the news: 3 strategies to recover from holiday overshopping, the pros and cons of merging money when married, and how to downgrade your Chase card without losing your points.

Smart Ways to Establish Credit in 2020
Sorting through the options.

Overshopped in December? Try These 3 Strategies to Recover
Beating the holiday shopping hangover.

Does Marriage Have to Mean Merging Money?
A look at the pros and cons.

How to Downgrade Your Chase Credit Card Without Losing Your Points
A change in annual fee has customers thinking twice.

Friday’s need-to-know money news

Today’s top story: AmEx makes it easier for immigrants to access credit. Also in the news: Retirement savings mistakes financial advisors see too often, big changes could be in store for student loan borrowers, and why you shouldn’t tell the person you just started dating about how much money you have.

AmEx Makes It Easier for Immigrants to Access Credit
How the new feature works.

7 Retirement Savings Mistakes Financial Advisors See Too Often
How to avoid them.

Big changes could be in store for student loan borrowers
Rewriting the rules.

Don’t Tell the Person You Just Started Dating How Much Money You Have
Keep it to yourself for now.

Friday’s need-to-know money news

Today’s top story: Taking a “micro trip” before the holidays. Also in the news: Money summits for couples, the best and worst US cities for retirement, and the top 10 most regrettable mistakes retirees made in the 20s.

Need a Break Before the Holiday Break? Consider a ‘Micro Trip’
A little relaxation before the holiday rush.

Start With a Money Summit to Hit Your #couplegoals
A meeting of the minds.

Here are the best and worst US cities for retirement
Did yours make the list?

Top 10 Most Regrettable Mistakes Retirees Made In Their 20s
Learning from others.

Q&A: Can this marriage’s finances be saved?

Dear Liz: I am 64 and my husband is 63. I retired five years ago after a 30-year professional career. My husband is an executive and plans to work until 70. We own two homes and one is a rental property. Both our boys are successfully launched. Currently, 67% of our retirement money is in stocks and stock index funds. The rest is cash and IRAs or 401(k)s. I am working on re-allocating that 67% to safer investments, but our two investment advisors don’t even agree on what that would look like. And my husband does not want to leave potential stock market gains. Help! I think it is time to switch to more conservative investments. What do you think?

Answer: Many financial planners would say you should only take as much risk as required to in order to reach your goals. Exactly what that looks like depends on how much you’ve saved, how much you spend and how much guaranteed income you expect to receive from Social Security, pensions and annuities, among other factors.

Most people need a hefty exposure to stocks in retirement to get the returns they’ll need to beat inflation, but whether that proportion is 30% or 60% depends on their individual circumstances. Your current allocation could be fine if your basic expenses are entirely covered by guaranteed sources (Social Security, pensions, annuities) and you want to leave a substantial legacy for your sons. Or you could be way overexposed to stocks and vulnerable to a downturn if you’ll need that money for living expenses soon.

Your IRAs and 401(k)s are not investments, by the way. They’re tax-deferred buckets to hold investments. How that money is allocated among stocks, bonds and cash matters as much as how your other investments are allocated and should be included when calculating how much of your portfolio should be in stocks.

If neither of your investment advisors is a certified financial planner, consider seeking one out to create a comprehensive financial plan for you and your husband. The plan should consider all aspects of your finances and give you a road map for investing and tapping your retirement savings. You can find fee-only financial advisors through the National Assn. of Personal Financial Advisors, the XY Planning Network, the Alliance of Comprehensive Planners and the Garrett Planning Network.

Thursday’s need-to-know money news

Today’s top story: Don’t be duped by these phone and email scams. Also in the news: Help with checking your finances, how a single mom paid off nearly $80K in debt in eight months, and 1 in 5 Americans are hiding this financial secret from their spouses.

Don’t Be Duped by These Phone and Email Scams
Watching out for scammers.

Can’t Bear to Check Your Finances? Here’s Help
Ignorance isn’t bliss.

This single mom paid off $77,281 of debt in eight months—here are 5 steps she followed
Time to track everything.

1 In 5 Americans Are Hiding This Financial Secret from Their Spouses
Transparency is key.