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Smart Money Moves for Newlyweds

For married couples, it makes sense to have a mix of individual and joint accounts.

If you’re a newlywed, you and your spouse probably know by now what you like to do as a couple and what you like to do separately. Brunches and birthday parties? See you there. Poker nights and pedicures? See you later. But when it comes to combining your personal finances, the lines between yours, mine and ours may not be so clear.

Spending

Before you merge your credit cards, check your individual credit scores. The most common way to piggyback on a spouse’s credit card is to sign on as an authorized user. But once you’re authorized, the card’s previous history will appear on your credit report; if the account has blemishes, your credit score will get dinged. You could also open a joint credit card. In that case, however, both spouses are responsible for the full balance of the account, so one person behaving badly will negatively affect both credit scores.

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Gerri Detweiler, director of consumer education at Credit.com, says a common strategy is to authorize your spouse to use a card that offers favorable terms, attractive rewards and has a positive credit history, and for both spouses to maintain separate credit accounts as well. That way, she says, you can pool household purchases and work jointly toward earning airline miles or rewards points.

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Many couples approach bank accounts similarly. The hybrid approach, with a joint account for shared expenses and individual accounts for personal spending, is a good way to go for many couples. However you choose to handle it, communication is essential. “Have these financial discussions early,” says Detweiler, “while they’re still money talks and not money fights.”

Insurance

Assuming you’ve recently registered for your wedding, it should be easy to create a detailed home inventory, complete with estimated values for all of your possessions (see 3 Simple Steps to Create a Home Inventory). Knowing the value of your things will help you determine how much renters or homeowners coverage to buy, says Jeanne Salvatore, of the Insurance Information Institute. A typical renters policy costs $16 per month and provides $25,000 in property coverage and $300,000 to $500,000 in liability coverage. Homeowners policies usually cover personal possessions at a rate of 50% to 70% of the coverage on your home.

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Getting married also gives newlyweds more choices when it comes to health insurance. If both of you have coverage at work, do a cost-benefit analysis. One spouse’s employer may offer better coverage than the other’s, but many employers now charge dependents a larger percentage of the cost than they impose on employees, and some businesses add a surcharge for spouses who could get coverage elsewhere.

You may be able to skip life insurance until you have kids—unless you’re buying a house together and need two incomes to pay the mortgage.

Saving and Investing

Make sure you have enough money socked away in an FDIC-insured bank account to cover at least six months of living expenses.

If both of you have retirement accounts through your employer, contribute enough to earn the maximum company match. After that, shift more money to the plan with better investment options and lower fees, regardless of whose plan it is. “You want to focus on what’s going to give you the most bang for your buck,” says Danielle Seurkamp, a cer­tified financial planner in Cincinnati.

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