Newlyweds need a union of their finances

Before getting married two months ago, Minh Nguyen, 39, and Khanh Ninh, 40, had highly independent financial lives.

Both grew up in large immigrant Vietnamese families and learned the value of hard work at early ages.

By the time he was 9 years old, Nguyen was cooking meals for his parents and nine siblings in San Jose. After dinner, he would sit beside his mother, stuffing potpourri bags that she would make on contract.

Nguyen now works as a freelance video and film editor, and this year will make about $110,000. Among the recent shows he worked on was “The Girls Next Door.”

Ninh, as a 9-year-old growing up in Richmond, Calif., helped her dad string together wires for the video game consoles he repaired. Her father also owned a janitorial service, and during summers when Ninh was a college undergraduate, she cleaned sorority houses at UC Berkeley.

“I’ve always worked hard. Sometimes I’ve had two jobs at a time, even three,” said Ninh, who later attended Berkeley as a graduate student, earning a master’s degree in clinical social work.

Ninh currently works two jobs, as a career counselor for the North Orange County Community College District in Anaheim and as a social worker for St. Joseph Hospital in Orange. This year she’ll make about $90,000.

Now the couple are facing the challenge of merging their financial lives.

Before the wedding, they discussed each other’s finances to some degree to learn how much each made and whether the other had looming debt. Financial planner Jennifer Hartman said it’s important to have those discussions.

“You talk about each other’s past relationships and each other’s families,” Hartman said. “You need to talk about each other’s finances too. You need to know what you’re getting into.”

Ninh didn’t want to pry too much.

“A friend of mine told me before I married him I should ask him what his credit score was,” she said. She didn’t, and also decided not to ask for a prenuptial agreement.

That’s a difficult area for couples, but Hartman is in favor of prenups. “It’s protection in case the unthinkable happens,” the planner said. “It helps delineate everything.”

Luckily, Ninh and Nguyen appear to be financial soul mates. Not only are both hard workers, they’re also frugal.

Ninh’s assets include approximately $205,000 saved in retirement accounts and $3,000 in a savings account. On the other side of the ledger, she has $279,000 still to go on a mortgage on a condominium in Anaheim, and she’s paying off a $40,000 personal loan from her sister.

Nguyen has $45,000 in a savings account and $55,000 in retirement accounts. He paid off $40,000 in student loans from USC by scrimping and dining in, and he now has no debt.

He would have had much more in savings, but he put $100,000 of his own money into a movie, “Touch,” that he wrote and directed. The film, which centers on the relationship between a mechanic and a woman who works in a Vietnamese nail salon, started making the rounds of film festivals this year with the goal of finding a distributor.

The only asset Nguyen and Ninh have as a couple is the $19,000 in cash they received in wedding gifts.

“They’ve been on their own financially for decades,” said Hartman, who reviewed the couple’s finances. “It really is a transition to come together financially.”

Ninh wants to make sure they are cautious in their planning. Nguyen’s income can swing from year to year — last year he made just $40,000 while he worked on his film.

“I want to be prepared for the financial ups and downs,” she said.

Though Hartman said the couple have saved more than most people their age, they still have work to do to secure their financial future.

They need to devise a unified household budget, establish joint accounts and define the goals they would like to save for together. Also, Hartman said, they need to rethink how their retirement funds are invested.

To get them started, she had them carefully track their expenditures to determine their monthly cash flow.

Based on that, the planner projected that Ninh and Nguyen would jointly spend about $66,000 this year out of their combined $200,000 yearly income.

That includes monthly expenses of $1,500 for rent and a modest $240 on groceries. Their monthly restaurant tabs come to about $350 and they spend about $400 on gasoline. Their haircuts come to just $20 a month, and they spend only $25 on recreation and hobbies, and an additional $10 on books and magazines.

In other words, they are living well within their means.

Currently they save $880 a month toward retirement and put aside $500 for vacations.

Hartman suggested they start designating half of their individual incomes as money they will spend and save jointly. About 15% of this money should go into retirement accounts. The rest should be divided between two accounts: a joint checking account from which household bills will be paid, and a savings account, with a goal of saving $33,000 (six months of their combined expenses) that can be tapped in case of emergencies.

After that savings goal is reached, they can keep saving for other purposes.

The remaining money can be used for their individual needs.

Ninh is paying off the mortgage on her Anaheim condo where she lived before the couple rented a house in Westchester. She is hoping to find a renter who will pay $1,800 a month — approximately the monthly mortgage. This would not be a good time to sell: She paid $395,000 for the condo, but it’s now worth about $282,000.

Ninh also aims to pay out of her own earnings about $450 a month to her sister to pay off the loan.

Nguyen wants to save, out of his earnings, money to make another film. “I would never ask her to fund one of my movies,” he said.

While they’re sorting out how to pool their resources, the couple also need to do some financial housekeeping, Hartman said. She recommended they insure their cars through one carrier, rather than two, to get a multi-car discount. They should also name each other as beneficiary on their investments and get life insurance, especially because they plan to start a family.

They should also consult with an accountant to discuss how to jointly file their taxes.

One more thing on the list: reallocate their investments. Nguyen holds seven individual stocks in his retirement portfolio, with one stock — Apple Inc. — accounting for as much as 42% of his retirement investments. That stock has done quite well, but in general Hartman frowns on individual investors holding single stocks, saying most people don’t have the discipline or acumen to manage them and are better off with mutual funds.

“If you don’t have a sell price for an individual stock holding, then you haven’t done your homework and shouldn’t be holding it,” she said.

Ninh, who holds no bonds in her retirement portfolio, also needs to rebalance. Overall, Hartman advised the couple to reallocate their retirement investments into mutual funds with an overall mix of 77% in stocks and 23% in bonds.

After all those years of independent living, the newlyweds found Hartman’s advice a bit overwhelming. But they have started down the road of establishing the joint accounts and adjusting their investments. As with all couples, it will be an ongoing conversation.

“It made me realize that there is a lot we still need to talk about,” Ninh said.