Merging Finances , 529 plans, and Trust Beneficiaries – The White Coat Investor

Dr. Disha Spath is hosting with us again this week! Together, we answer questions about marriage, family, and finances. We talk about merging finances when you get married, 529 and UTMA accounts, how to manage complicated trusts, and how to add beneficiaries to trusts. We also discuss the importance of women getting their term life and disability insurance in place well before they become pregnant. There is a little something for everyone in this episode.

I think issue No. 1 when you're married is a lot of people are trying to keep separate finances for whatever reason. I don't know if it's a trust thing or they just don't want to make changes or if it's some power or control thing. I think that's really hard to do well. Now, I'm sure there are a few people out there that do it well, but almost all the financially successful couples I know have been through this process and they've merged their finances in some way. I think you're going down the path the right way, but there's no doubt that there are some changes. Especially the later you get married, the more complicated your financial lives are separately, the harder this merging process is going to be. Disha, where would you start?

There are opportunities here, too. For instance, if one of you has terrible credit, by adding your name to an account that's been around for 20 years, all of a sudden you have spectacular credit. You can do that with your kids too, by the way. I'm not sure if you can put them on an account that's older than them, but I bet you can. Then all of a sudden, your kids are in college and have an 810 credit score because they've got this 20-year credit history. There are some advantages there that you might not have thought about when you merge accounts. We have had merged finances since before we really had any money. It was really easy for us, and as our financial lives got more and more complicated, we just added things on as joint accounts. We have both our names on savings accounts, bank accounts, any checking accounts, brokerage accounts, and credit cards. Anything that can have two people's names on it, we have two people's names on it just to keep it easy. You can simply add the partner's name to the cards you want to keep.

There are definitely more opportunities there. You have to keep track of that stuff, though. I mean, that's like a spreadsheet if you have that many cards.

You can't combine retirement accounts. Retirement accounts are always individual401(k) is always just in your name. Your IRA is always just in your name, but if you're going to look at all your finances together, you've now got twice as many accounts to manage in your asset allocation. That will be a little bit of a complicated process. The two of you have to actually agree on an asset allocation and then adjust the accounts accordingly. That part might be a little bit tricky to combine.

You do need somewhere to combine everything so you can keep track of it. Whether you're doing it on a spreadsheet or whether you're using Personal Capital software or some other software. Mint also has similar functions.

The biggest obstacle, though, the reason people don't want to combine finances is because they don't want someone else telling them how to spend. We've gotten around that. We don't really do this anymore, but for a long time, we had allowances. It was money that we didn't have to account to our spouse for. When we were really poor in medical school, it wasn't very much money. I think there was at least one month where it was $20. But we had money that we could spend and we didn't have to account to the other person for. That amount can be whatever your budget allows that helps you feel like you still have some freedom, some independence, and yet you can still be efficient when it comes to managing your money.

I think the hardest part is getting your goals aligned once you've gotten together and then working out that budgeting process. I would expect with most couples, it probably takes six months at least. Keep at it, know that this too shall pass, and you can get your finances aligned and be working together toward goals. Because when both of you are working together, it's really powerful. You're going to get a whole lot closer to what you're trying to accomplish.

Yeah, for sure. You go from his income and her income to our income. His and her debts to our debts. His and her assets to our assets. One of you brought more income into the marriage. One of you brought more assets into the marriage. One of you brought more debt into the marriage. What are you going to do? Do you want to be married or not? It now becomes all ours, and you start working on it together. I wouldn't start working on it before you're married. Remember there are some legal protections that come with marriage, and I wouldn't combine your finances before that point. But once you're married, I do recommend you combine your finances.

Absolutely. You can't save receipts. You can save them until the end of the year, but by the end of the year, you have to take the money out or you're not taking it out based on that receipt. So not an option for you, but here's the deal. How much money are you putting in there? Most people don't get enough into their 529s to cover the educational costs for their kids. Plus, if you have a little too much in there, you know what most people do? Grandkids. You just change the beneficiary. It's not that big a deal if you have too much money in there.

If you're having significant K-12 educational expenses, then you might as well take advantage of the 529. If you have your kids in private school, you might as well run the money through the 529. Maybe you get a state tax break on it. Maybe you can let it grow for a year or two before you pull it out and get some tax-free earnings. But if your state is not giving you a state tax break, you're taking the money out immediately after you put it in the 529, maybe you don't want to bother. This is something for high earners. This is a tax break for the rich, if you will. Poor people don't use 529s because they don't have the money to put into 529s. So, take advantage of these things. These accounts are for you. As a high earner, you talk about all these downsides of being a high earner, right? You pay these high marginal tax rates and you have all these special taxes just for you. You're phased out of all kinds of deductions, but the 529, that one's for you. So be grateful and use it as best you can.

Your question sounds like an ad for UTMAs. UTMAs are a kid's brokerage. It's a custodial account. Your kids don't control it until 21 in most states. The age varies a bit by state. Until then, it's their money. So, if you spend it, you have to spend it on their behalf. Then when they hit that age, it's their money. The downside of this account is they can spend it on whatever they want. The upside is that it gets a significant tax break. It's around $1,200 a year that doesn't get taxed at all, assuming they don't have any other unearned income. Then, another $1,200 that gets taxed essentially at their earnings rate. That is up to about $2,400 a year in income that you are not paying at your tax rate. Now, if it earns more than that, you start paying what's called kiddie tax, which is at your tax rate. It gets paid on your tax return rather than their tax return, essentially, which is great. If you're investing tax-efficiently, you can put a lot of money in there before you get to $2,400 a year in income. I mean, the yield on a total stock market fund right now is well under 2%. You could have over $100,000 in there before you start paying it at your income tax rate.

We also use UTMAs. We have 529s for college. We have Roth IRAs for any earned money my kids have. Which is a lot for the teenager. She maxes out her Roth IRA now, but for the other ones, it's whatever we pay them for modeling, mostly, and maybe a few odd jobs and a lemonade stand and that's about it. We view the UTMA as a pretty significant fund. We call it the 20s fund and it's kind of a trial inheritance for them. Because if you think back to when you could really have used money, when you could have really used an inheritance from your parents, when was it?

You have all these expenses and you have no money and you have no ability to make money at any sort of a decent rate. That's when you need it. Whatever it might be. It might be a wedding, a honeymoon, a car, a down payment, missionary work, grad school. There are all kinds of expenses that you have in your 20s. The thing we like about that idea is we're giving them an inheritance, and then we see what they do with it. Before they get the real inheritance, we get to see how they manage a small inheritance. Now we know whether we put it in trust or something, because it turns out they need to spend through a trust. But hopefully, by the time they're out of their 20s, we know that because we've watched what they did with the first one.

You're definitely looking for UTMA. If you're just talking about putting tiny amounts of money in it, something like Acorns is probably really good. If you're going to be serious about it, though, I'd go wherever you put your accountswhether that's Fidelity or Vanguard or Schwab or whatever. But they've got minimums. Vanguard, I think, it's $1,000 minimum. If you're not going to put a thousand bucks in there, you probably don't want to start at Vanguard.

This next one isn't really a question but came from an email. It's something that somebody wrote to point out, and while I feel like I've said this before, I may not have been as adamant about this as I should have. This fact bears not only mentioning, but repeating.

As we all know, pregnancy isn't always planned. In fact, in the emergency department, the rate of immaculate conception is about 15%. People say there's no possible way I can be pregnant, and about 15% of them are. It's not actually having the dependent, it's plans to have a dependent in the near future. I'm not saying you have to do it when you're 25 and not planning to have kids until you're 35, but you need to have term life and disability insurance in place before you get pregnant.

I tell people to buy this stuff when you come out of residency. As far as disability, buy it when you come out of medical school; buy it as an intern. Now, that doesn't always mean before you have kids. But often it means for a doc before you have kids. But as far as term life goes, when someone depends on you, you need to have insurance. In this case, you could run into problems. It's not like you just get these medical problems during pregnancy; people die during pregnancy still. It's a lot safer than it used to be. But there was a sad story a couple of years ago. It might have even been an OB resident who died during childbirth and no insurance. It's a terrible, sad story. GoFundMe is not an insurance company. It breaks my heart when I see some newspaper article about some 25-year-old father of three, and there's GoFundMe at the bottom.

The main point is get your life insurance and get your disability insurance before you get pregnant. You don't need to buy it 10 years before you get pregnant. But as you're starting to think about starting a family, that's the time to get that insurance in place.

Congratulations on your success. You're doing awesome. You guys are really killing it. The fact is you say you're going to work five more years making this kind of money. I mean, your assets are going to be double what they are now five years from now. I suspect your spending habits probably aren't going to change all that much. What you really ought to be thinking about is what you're going to do about estate taxes, because you almost surely are going to have an estate tax problem. Start thinking at least a little bit about your estate planning.

This concept of stop playing when you've won the game,' comes from William Bernstein. The idea was to have a liability matching portfolio. Where your portfolio matches your future expected liabilities, and the idea is with the things that are going to match those liabilities, you don't take a lot of risk. Whether you're putting those into TIPS or I bonds or those sorts of things, relatively low-risk assets for the money you absolutely must have. Then everything else, you can take whatever risk you want, because as you mentioned, even if you lose half your assets in the market, you're still OK.

Next, is there something you can spend money on that is going to make your life happier? If there is, go spend the money. Whether that's upgrading a car, whether that's doing a renovation on your house, whether that's going on a trip, or, more likely, whether it involves changing something about how you're earning money. Maybe you take less call. Maybe you do fewer night shifts. Maybe you take every Friday off, whatever it might be. You need to, at this point, be looking at those sorts of things. Because otherwise, you're just going to be leaving a whole lot of money behind when you go, at the rate you guys are going. You can buy some of your life back by spending money on those items.

What other tips do you have for somebody making $900,000 a year who is planning to work five more years and already has $9 million? What do you tell that person?

But as far as the asset allocation, if you want to do what Bernstein says, basically go out and buy enough TIPS to cover all your future expenses, all your future mandatory expenses. Then you can take additional risk with the rest of the portfolio, but that's where the quote comes from that you've heard before to stop playing when you've won the game. TIPS are basically inflation indexed bonds. They're not a screaming deal right now; they actually have negative real yields right now. You go buy a five-year and it's around minus-1% real is what they're selling them at. But the idea was when you can get them with at least a 0% real or 1% or 2% real rate on them, then you could at least keep up with inflation with it without really taking on significant risk.

I think there's a little bit of confusionif not in your mind, then in the minds of some of our listeners. We're talking about two types of beneficiaries. When you make a trust, there's a trust document written up that talks about the beneficiaries of the trust. It's important not to confuse those beneficiaries with the beneficiaries of your retirement accounts, for instance, or your life insurance policies or your annuities or whatever. Those are set up by the trust document. The beneficiaries of your trust are from the trust document. What the trust document says, that's who's going to benefit from whatever is in the trust. However, what a lot of people want to do is they want all of their money when they die to go through the trust. If you want that to happen, the trust has to be named as the beneficiary. Usually, its not a secondary beneficiary; usually, its a primary beneficiaryunless the first beneficiary is your spouse and then the second to die, and it goes into the trust.

But how do you do that? Well, it depends on the institution. If you want to change the beneficiary of Vanguard, you log into vanguard.com. You get the text from your phone, you put that in there, and then you're in and you go to beneficiaries and you change it. That's all there is to it. You just do it online. You hit enter and you have new beneficiaries. You can change what percentage goes to everybody. It's super easy. Now, every institution might be a little bit different. If you want to change it under your life insurance policy, maybe you have to fill out their form and send it to them.

But this is an important part of setting up a trust. Because if you don't ever actually put anything in the trust, if you don't rename it so the trust owns it, or you don't make the trust the beneficiary of it, you just wasted a lot of money and time and effort on setting up a trust. If there's nothing in it, you're not helping anyone. That's an important part.

It sounds like you set up a trust a couple of years ago and you still haven't really funded it or gotten it all set up. Remember the first part doesn't do any good unless you do the second part. That might be, if this is a revocable trust and you're just trying to avoid probate with stuff, that might mean retitling your house, it might mean retitling your vehicles, your boat, whatever, setting up your will so that anything left over goes into the trust.You have to make sure you take care of all those steps.

If there's no beneficiary at all, it gets paid to your estate and that's not what you want. You want it to go to a person most of the time, or at least you want your trust set up so that it doesn't have to withdraw all at once. A bigger problem, I think, is people don't change their beneficiary when they need to. If you get divorced, change your beneficiaries. Otherwise, all your money's going to your ex. Evaluate those beneficiaries every now and then.

We had to google what QPSA is.

If you don't want your spouse to get an annuity, don't choose it. But here's the deal. Remember retirement accounts, the general goal and the general guideline the government has for retirement accounts is you can't screw over your spouse. You can't somehow keep your spouse from being protected also by your retirement account. When you move money out of a retirement account, a lot of times you need your spouse's signature to do it. You have to keep in mind that everything to do with the retirement account and how you get money out of it, they're thinking about your spouse. This sort of thing is put in place thinking, Well, what if my spouse doesn't know how to manage money? Let's put an option in there so they can just annuitize it. And my spouse will have an income for the rest of their life and doesn't have to think about it.'

They're coming from a good place with this sort of a suggestion, but if you don't want it to happen, you don't have to have it happen. Your spouse can just roll your retirement account into theirs when you die. It's just a simple rollover. Then they have a bigger IRA or a bigger 401(k) or whatever it gets rolled into. I hope that answers the question. QPSA is a new term to me. But it's just annuitizing the annuity or annuitizing the retirement account when you die.

I'm a do it yourself-er at heart. I'm not the most hardcore do-it-yourself-er on the street. But I'm pretty hardcore to do it yourself. But at this point in my life, I have three attorneys. We have an intellectual property attorney. We have a general business counsel attorney. We have an estate planning attorney. I'm working with a different attorney with my parents, for their estate planning. You know what? You're not going to be an expert in every trust, every legal question out there. You're going to need to use attorneys at some point in your life. And that's OK. Don't feel bad getting an attorney when you need an attorney and pay them what they're worth and get good advice. Don't be penny-wise and pound-foolish when it comes to that sort of a thing.

I think you're going to need to work with, if not those attorneys, if you really hate them for some reason, or you think they're giving you bad advice or you don't trust them, then sure, get new attorneys. But you're going to need attorneys, at least one, to help you sort this stuff out. This is the one that presumably your parents or grandparents trusted. Why not start there? Same with accountants. If you want to try to do your own trust tax returns, be my guest. If you want to do your own S corp returns, yes, they can be done by yourself. But at a certain point, you've got to go, I've been successful enough. Is this really how I want to use my time? Am I really qualified to do this?'

We now have an accountant doing WCI tax returns every year. They went back and they changed a couple of things. There were trivial things, but a couple of things that I was doing wrong on the S corp tax returns. If I'm getting things wrong on them, I know most white coat investors, if they try to do really complicated stuff on their own, are probably going to get some of it wrong.

Don't feel bad using an accountant. You certainly have the money for it, it sounds like. So do it yourself-ing is fine, but don't be a rabid do-it-yourself-er. Get advice when you need advice. And if that means talking to a financial advisor, a classic financial planner, asset manager type, to get a second opinion, I think that's a great step. It's fine to pay for some hourly advice for a second opinion. Lots of people do that every year, even though they manage their own assets. Honestly, when it comes to preparing your taxes, setting up wills and trusts and that sort of thing or managing your money, you might want some help. Asset management is not complicated. A handful of index funds is really all it takes, and you can do that. But don't assume that because you can do that, you can also handle all that other crap, too. There's room here to find a middle road and even room to get an advisor just to keep an eye on the other folks and make sure you're not getting hosed. It doesn't mean you have to pay them 1% of your assets the rest of your life. You can pay somebody a flat fee or an hourly rate to get that sort of a second opinion.

Pearson Ravitz are disability and life insurance advisors founded by and for physicians. This White Coat Investor-recommended agency grew out of one MD's experience with a career-changing on-the-job injury. Today, Pearson Ravitz serves the medical community in all 50 states. At Pearson Ravitz, they help you as a doctor safeguard your most valuable asset, your income, so you can protect the most important people in your life, your family. Pearson Ravitz makes human connections before they make quotes. Go to pearsonravitz.com today to schedule your consultation with a Pearson Ravitz advisor.

This one comes from Warren Buffett. He said,

People are going to try and sell you whatever they sell.

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If you did not get to attend WCICON22 but you want all of the awesome content, it will be available as an online course. Each year, we call this course Continuing Financial Education. This year's course is CFE 2022. It won't be available until around February 23, so be watching for that. Once the course goes live, you can access it at whitecoatinvestor.com/cfe2022.

There is value in persistence. Even if you do not have the highest income, if you persistently save a significant percentage of it and invest it in a reasonable way, eventually it grows to be quite a sum of money, and you will be free from the need to work for your money. A typical rule for financial independence is when you can live on 4% of your nest egg.

Dr. Disha Spath:Hi, and welcome to the White Coat Investor podcast number 250 Marriage, kids, and finances. I'm your host Disha Spath and I'm here with Dr. Jim Dahle.

Dr. Jim Dahle:Hey everybody.

Dr. Disha Spath:First, this podcast is sponsored by Pearson Ravitz. Pearson Ravitz are disability and life insurance advisors founded by and for physicians. This White Coat Investor recommended agency grew out of one MD's experience with a career-changing on-the-job injury.

Dr. Disha Spath:Today, Pearson Ravitz serves the medical community in all 50 states. At Pearson Ravitz, they help you as a doctor safeguard your most valuable asset, your income, so you can protect the most important people in your life, your family.

Dr. Disha Spath:Pearson Ravitz makes human connections before they make quotes. Go to pearsonravitz.com today to schedule your consultation with a Pearson Ravitz advisor.

Dr. Jim Dahle:All right, it's great. We are spending the whole weekend here together in Utah. We recorded last week's episode yesterday. We're recording this week's episode today. But the difference is we're recording this on January 29th before our big conference and you're listening to this after our big conference. So, we hope the conference went really well, but we can't actually say it did yet. We think it probably did because the people who are planning it and put in a ton of work, it's going to be awesome. But at this point, it's too late for you to go because the conference is over.

Dr. Disha Spath:Oh, too bad.

Dr. Jim Dahle:But if you want within the next week or so, we are going to have that content available to you as an online course. We call this course each year, Continuing Financial Education. And this year's course is CFE 2022, Continuing Financial Education 2022.

Dr. Jim Dahle:If you feel like you missed out, and if you didn't go, you did miss out, you can get that course at whitecoatinvestor.com/cfe2022. Now it may not be there by the day you hear this podcast, but within the next week or so, we're going to have that course available. So be watching for that.

Dr. Jim Dahle:But it's been a good weekend. We've had a lot of fun. We recorded podcasts yesterday all morning, and then we went snowshoeing. We got to fire the t-shirt cannon, which is going to be the highlight of the conference, we hope, if we don't take out any chandeliers in the ballroom.

Dr. Disha Spath:Exactly. Yeah. You're trusting me with a cannon.

Dr. Jim Dahle:Yeah, but we both practiced a lot. So, we think we can actually not take out anybody's eye. Then you went snowboarding today, right?

Dr. Disha Spath:We went skiing today.

Dr. Jim Dahle:Skiing.

Dr. Disha Spath:I learned how to ski. It was amazing.

Dr. Jim Dahle:And how'd that go?

Dr. Disha Spath:I actually got down the hill without wiping out too badly, so.

Dr. Jim Dahle:I see you and your husband here, neither of you with a broken leg.

Dr. Disha Spath:Okay. So that's a win.

Dr. Jim Dahle:The kids are still alive.

Dr. Disha Spath:So it was so fun. So beautiful.

Dr. Jim Dahle:Congratulations, Brighton, right?

Dr. Disha Spath:Yeah. Brighton.

Dr. Jim Dahle:I bet it was beautiful up there today. It was a sunny day.

Dr. Disha Spath:Oh, it's so pretty.

Dr. Jim Dahle:Yeah. Awesome. Okay. Well, today we got lots of fun stuff to talk about. Let's start with finances and marriage. Let's talk about marriage. This is really going to be an interesting one to answer because both of our spouses are in the room here with us. So, we'll see what this question is, but I'm afraid of where it's going to go. All right. Let's take a listen.

Dr. Disha Spath:Let's do it.

Speaker:Dr. Dahle, I love your show and appreciate all the work you put into it. One topic that I was hoping to learn some more about is finances and marriage. I'm getting married in the spring and I'm fortunate enough to have found a truly wonderful woman with whom I share values.

Speaker:And while we aren't having difficulties or disagreements about dollars, we realize that there are a lot of decisions and things to do to become an organized merged household. And one, I didn't know if you had any idea of kind of a checklist about how to kind of get your home in order, financially, or if you had any tips or tricks about things such as merging credit cards or car insurance, how to compare and contrast and optimize retirement accounts. How to look at banking, how different couples manage having pretty different incomes, and many other tips or tricks, I'd appreciate.

Dr. Jim Dahle:All right. Well, I think issue number one when you're married is a lot of people are trying to keep separate finances when they're married for whatever reason. I don't know why. I don't know if it's a trust thing or they just don't want to make changes, or if it's like some power or control thing. I think that's really hard to do well. Now, I'm sure there's a few people out there that do it well, but almost all the financially successful couples I know have been through this process and they've merged their finances in some way.

Dr. Jim Dahle:So, I think you're going down the pathway the right way, but there's no doubt that there's some changes. And especially the later you get married, the more complicated your financial lives are separately, the harder this merging process is going to be. Disha, where would you start?

Dr. Disha Spath:What we did, when Josh and I got married was we picked one bank where we would have our checking account, that we would pull everything else into. And Josh has access to USA. So that was amazing. It's a great service that they do.

Dr. Disha Spath:All we do is we link our credit cards, all of our credit cards, whether they're his or mine, all of our checking accounts, into one platform and USA enables that. I think most banks do that now. You can pull the data in from all the different places you might be spending money, all the different cards you might be spending money on so that it all shows up in one place. And that's really key because when you're trying to go over all of your spending, you want to know where all your accounts are. And it's really nice to see them in one place.

Dr. Jim Dahle:Yeah. There are opportunities here too. For instance, if one of you has terrible credit, by adding your name to an account that's been around for 20 years, all of a sudden you have spectacular credit. You can do that with your kids too, by the way. I'm not sure if you can put them on an account that's older than them, but I bet you can. And all of a sudden, your kids are in college and have an 810-credit score because they've got this 20-year credit history. So, there's some advantages there that you might not have thought about when you merge accounts.

Dr. Jim Dahle:But we've got everything completely merged. We've had merged finance since before we really had any money. And so, it was really easy for us as our financial lives got more and more complicated, we just added things on as joint accounts.

Dr. Jim Dahle:All our credit cards, we have both our names on savings accounts, bank accounts, any checking accounts, brokerage accounts. Anything that can have two people's names on it, we've got two people's names on it just to keep it easy and joint.

Dr. Jim Dahle:But how do you do that? What I would do is just pick the credit card you like. If somebody's got a really good credit card, add your name to it. They got some awesome gas cards that you can't get anymore. Like, we've got this PenFed one you can't even get anymore, but it gives you 5% back on gas. It's what we put all our gas on. So, if one person had a card like that, put the other person's name on it. Great.

Dr. Disha Spath:Yeah. And you can actually use that if you're trying a credit card hack. Chase has five cards. You can only get five cards in five years, I think. So, each spouse can then open up five cards in five years. And so, you double your point-earning opportunities.

Dr. Jim Dahle:Yeah. There are definitely more opportunities there. You got to keep track of that stuff though. I mean, that's like a spreadsheet if you got that many cards.

Dr. Disha Spath:Well, I put it all in Personal Capital. We're good to go.

Dr. Jim Dahle:Yeah. If you keep track of it, keep track of it. Retirement accounts, you can't combine. Retirement accounts, always individual. 401(k) is always just in your name. Your IRA is always just in your name, but if you're going to look at all your finances together, you've now got twice as many accounts to manage in your asset allocation. So that's going to be a little bit of a complicated process. The two of you have to actually agree on an asset allocation and then adjust the accounts accordingly. So that part might be a little bit tricky to combine.

Dr. Disha Spath:Personal Capital.

Dr. Jim Dahle:Personal Capital does it well, it sounds like.

Dr. Disha Spath:Not sponsored. Not sponsoring today, but they should be.

Dr. Jim Dahle:Somebody go get an affiliate deal with Personal Capital. Actually, I think just about every blogger, but us has a Personal Capital deal. I don't think we have them as a sponsor, but yeah, we could probably go get one. But it does work.

Dr. Jim Dahle:But you need something to combine everything so you can keep track of it. Whether you're doing it on a spreadsheet, whether you're using Personal Capital software or some other software. Mint, I think, has similar functions.

Dr. Disha Spath:Yeah. And it actually breaks down your asset allocation for you. Look up all the accounts and it just pulls in exactly what you're invested in so you can see.

Dr. Jim Dahle:Okay. So, the biggest obstacle though, the reason people don't want to combine finances is because they don't want someone else telling them how to spend.

Dr. Disha Spath:That's true. That's true.

Dr. Jim Dahle:We've gotten around that. We don't really do this anymore, but we do this for a long time. We have allowances. It was money that we didn't have to account to our spouse for. And when we were really poor in medical school, it wasn't very much money. I think there was at least one month where it was $20.

Dr. Jim Dahle:But we had money that we could spend and we didn't have to account to the other person for. And, so if you feel like I don't want someone telling me how to spend, just set it up so you have allowances. And doesn't have to be $20, it can be $20,000, whatever your budget allows. But enough that you feel like you still have some freedom, some independence, and yet you can still be efficient when it comes to managing your money.

Dr. Disha Spath:Absolutely. We have fun funds too. And you brought up your really fun topic, budgeting. My favorite. Okay. I understand I am the only person that is excited about that. You know what? Josh and I sit down and budget at the end of every month and we run through our

Dr. Jim Dahle:It'd be nice if you could do it once a year, huh?

Dr. Disha Spath:Yeah, that would be nice. But that wouldn't be very accurate.

Dr. Jim Dahle:Tell us, what does your budgeting meeting look like?

Dr. Disha Spath:We have a spreadsheet, a Google Doc that we update together. We have computers facing each other, so it's very official looking. We sit down and we look at all of our spending and we put it all in a spreadsheet. And if something looks a little off or someone's spending too much, we point it out nicely, but we try not to judge too much.

Dr. Disha Spath:It helps us keep everything together. We both know where the money is going and we both know how we need to adjust for the next month, and then neither one has to tell the other person exactly what to do, the spreadsheet shows you. So that's nice.

Dr. Jim Dahle:That's probably the hardest part, I think, is getting your goals aligned once you've gotten together, and then working out that budgeting process. I would expect most couples, it probably takes six months. Probably takes doing this six times before you are kind of getting it right. And most of the disagreements you're going to have are going to come out in those first six months.

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Merging Finances , 529 plans, and Trust Beneficiaries - The White Coat Investor