How To Guides

It’s not unusual for spouses to have a discussion about money when tax season rolls around every year. It’s a must, right? It will show you where you are at the moment, such as how much tax you owe and what your refund is likely to be. Fingers crossed.

This is a great way to track your progress towards your money goals. You may not spend much time talking about how to improve your financial situation. Tax time is more about “get it done”.

However, financial security and net worth improvement can be built upon small, consistent steps. This requires constant communication.

Marrying your money is the best way to have a constant exchange of financial information among couples.

It is a leap of faith to combine bank accounts, investments, and almost everything else. Some people are reluctant to merge bank accounts, investments and most everything else, especially Generation Z adults (those in their late teens or early twenties). Nearly half (48%) of respondents say they won’t combine their finances and their spouse.

There are many benefits to merging finances:

• Simplicity. It is easier to keep only one set of records than two. It can be easier to manage a budget.

• Transparency. It is possible to help one another through difficult times and celebrate financial milestones.

• Accountability. A checks-and balances system will be built into your relationship to keep you on track with your financial goals. This could include saving for retirement, paying off debt, or buying a house.

Some cons could include:

• Possible complication , especially if one of the partners has a higher than average income or brings significant debts or investments to the relationship.

A money merger could also happen organically over time. There is no rule that says you must run your financial affairs one way or the other. You might find the best solution somewhere in between.

One of my clients, an elderly woman, came to me as a financial advisor with a box of stock certificates that her husband had stored in their attic years ago. They were not worth anything to her.

We researched each one and discovered that they were all useless for one reason or the other. She was in tears. She was also disappointed in her husband’s money management. Many important conversations get lost or delayed over the years.

You might consider changing your relationship to an equal financial partnership with some record-keeping.

A wife shared her story about how her husband made more than six figures by running a small business. She also pointed out that her husband failed to pay the estimated tax for that one-person business.

The tax refund she expected on her separate income could be lost as he has to pay the penalties, taxes and interest. She could be resolute and let him deal with the IRS. Their financial health could be seriously affected.

The IRS’s pay as you go tax system can save the couple money and reduce stress.

As financial partners, it can foster a sense of cooperation and a shared goal to improve one’s overall money health.

Partners and spouses who feel comfortable with their partner taking the lead in financial decisions and management can still play a greater role. And likely should; our tax-payment-delaying-spouse serves as a prime example.

Communication is key, even though the day-today and year-to–year management of your money will be done between you and your partner. It’s the same for all aspects of your life together.

You may want to disclose financial information.

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  Passwords and account numbers for all banks, savings and credit accounts, credit cards and mortgages, safe deposit boxes and student loans.
  

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  Information about real estate and investment.
  

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  Information about taxes, including information on income tax returns and information on property tax.
  

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  Information about insurance policies.
  

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  A list of beneficiaries to all accounts that have them.
  

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  A list listing recurring charges, bills, or payments that are debited or deposited to accounts.
  

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  Location of wills, powers-of-attorney and other legal documents
  

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  Contact information for employers, financial advisors, and business associates