One of the leading causes of marital strife is money. Learning how to share a budget and a bank account can cause more friction than learning how to share a home. So when it comes to marriage and finances, both parties must get on the same page.
From budgeting to taxes to planning for a family, newlyweds face a ton of challenges as they build a new life together.
Let’s discuss 7 things you need to know to navigate managing your finances as a couple.
In This Article
1. Plan Your Wedding Within Your Means
Love and money are subjects many people don’t like to mix. Still, your wedding is a great way to start off your marriage with a commitment to shared financial responsibility.
Many couples face significant debt from student loans or even credit cards as they begin their lives together. It’s easy to get caught up in the excitement and overspend to make your big day special. But going into debt to finance your wedding will make it harder to accomplish other financial goals down the road. If you’re paying for your own wedding, consider a celebration you can pull off without adding more debt to your ledger and throw a bigger celebration on your fifth or 10th anniversary when you’re in a stronger financial position.
2. Be Honest About Your Financial Status
Most people don’t come into a relationship with a blank financial slate. It’s important to be honest with your partner about your financial status before intermingling your finances. If one or both partners have significant debt, that can affect how you split the bills or set financial goals. It can also add stress to the relationship, especially if one partner has significantly more debt than the other.
Remember that credit is tied to the individual, so your partner’s pre-marriage debts won’t affect your credit. However, many states operate under a common law system, so debts incurred while you’re married may affect both partners. And of course, if one partner has a lot of debt to repay, that can affect your ability as a couple to work toward financial goals.
3. Communicate Your Goals and Priorities
It’s important to discuss your spending patterns, lifestyles, and financial priorities with your partner. Financial issues are the leading cause of marital fights and the second leading cause of divorce. Good communication from the get-go can reduce opportunities for misunderstandings and disagreements.
Marital fights about money aren’t always about a lack of money. If one partner is frugal and prefers to save funds for a rainy day while the other partner lives large and spends freely, there’s potential for conflict no matter your income.
People’s attitudes toward finances are often formed by their personal history and circumstances, but communication is the first step toward compromise. Understanding each other’s pain points, attitudes about personal finance, and long-term goals is the first step. Big goals like purchasing a home are easier to achieve when you’ve agreed on a plan.
4. Decide on Combining Finances After Marriage
There’s no one size fits all method to determine if or how you should combine finances. Some couples maintain separate finances while others combine all their accounts. It’s also common to mix both, having a joint account for major expenses and individual accounts for spending money.
If one partner lets joint bills go unpaid, that could affect both partner’s credit scores. Keep in mind that even if you keep your accounts separate, financial issues for one partner can affect both partners if they’re responsible for a joint bill in both names.
5. Consider a Prenup or Postnup
Many couples report hesitation to propose a prenuptial agreement because they believe it shows a lack of trust. However, marriage and finances are both subjects in which a prenup can help inspire more trust.
Contrary to popular belief, a prenup can strengthen a marriage. It creates a framework in which both parties discuss their assets, debts, and financial status, which is a tough conversation for many newlyweds. The ability to discuss finances and marriage and reach compromises is essential to making your relationship last.
6. Research Taxes, Benefits and Insurance
It’s important to make sure you’re knowledgeable about the specifics of how marriage may affect your state and federal taxes, insurance, and employee benefits.
In some circumstances, marriage can lower your taxes if you file jointly, such as when you or your spouse have a sizable difference in annual income. It’s best to consult a professional tax service to determine the best strategy for your circumstances, especially for the first year of marriage.
Many car insurances and homeowner’s insurance providers allow married couples to have a joint insurance policy, which can often save money compared to individual plans. Employers also typically offer the option to add your spouse to health insurance or life insurance. If you both have benefits through your employers, compare your benefits packages and go with the one that benefits you the most.
7. Plan to Overcome Challenges
According to a recent CNBC survey, 63% of Americans live paycheck to paycheck, without the means to handle unexpected expenses or emergencies. A critical goal for the early years of your marriage is to save three to six months of living expenses. If an unexpected event occurs, such as illness or being laid off, this can reduce stress and help you to weather the storm.
It’s also a good idea to discuss how to handle any unexpected obstacles that come up, such as a medical bill or car repair. Discussing things like taking out a personal loan or opening a joint credit card is easier when you do it before an emergency takes place.
Marriage and Finances
Love isn’t supposed to be about money, but managing money well can help reduce stress so you can focus on the one you love. Use our advice on marriage and finances to start off on the right foot — and live out your happily ever after!
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