Congratulations! You’ve found your special person and you’re planning a new life together.
As you start thinking through the details of your wedding, your honeymoon and how you’ll build your life together, you may be tempted to focus on the fun and romantic aspects of your future while avoiding the difficult topic of money. The reality, though, is that getting married will have a huge impact on both of your financial lives, and money troubles can undermine all of your future plans.
Thankfully, it doesn’t have to be that way. As newlyweds, learning to discuss and make plans for your finances together can set you up for long-term success. Here’s how you can tackle your finances as a couple.
Be transparent about your finances
The first and most important thing you can do to protect your financial future and your relationship is to be honest with each other about your financial status. After all, you’re going to be impacted by your spouse’s credit and finances once you’re married.
If you haven’t disclosed these details with each other yet, it’s time to learn what’s going on for each of you in these areas of your finances:
- Income
- Emergency savings
- Retirement savings
- Credit history and scores
- Debt load
- Financial plans and goals
- Financial obligations to family
Once you’re square with each other on your present financial situation, you’ll have a better idea of how you can support each other and you’ll be better equipped to plan and prepare for your future together.
Decide what to merge
Now that you’ve cleared the air around your current finances, it’s time to make some decisions about how you’ll manage money as a married couple. Do you want to blend your finances, keep them separate, or perhaps a combination of both? To prevent confusion and conflict down the road, you’ll need to make decisions about the following:
- Bank accounts: Do you want to maintain separate bank accounts and/or open a joint account for the household?
- Splitting expenses: How will you split each of the household expenses? Will you have combined budget? Will you each contribute a set amount, a percentage of your take-home pay, or will you cover specific expenses? Who will be responsible for making sure shared bills get paid?
- Debt: Will you work together to pay off your debts or manage each of your accounts separately? Will you add each other as authorized users to your credit cards?
- Everyday spending: Do you want to make day-to-day financial decisions together or independently? Would you like to have a say if your spouse plans to spend over a certain dollar amount?
These decisions don’t have to be set in stone, but they can help you avoid a ton of confusion and frustration once you start your lives together.
Do maintenance
Don’t expect your financial lives to run on auto-pilot. Once you’re married, you’ll start learning what works and what doesn’t. Instead of abandoning the decisions you made together, make time to revisit your financial goals and expectations on a regular basis.
Instead of putting off financial discussions until things go wrong, add a regular “Money Date” to your calendars, which is a date where you sit down together to review your finances, discuss what is and isn’t working and decide if you need a new strategy. Even if it’s just one hour every month, this recurring event will give you a chance to collaborate and improve your approach to finances together.
Set long-term priorities
Setting yourselves up for financial success takes more than just planning for the day-to-day. You and your spouse also need to plan ahead for the future you want to build together.
Do either of you intend to go back to school? Are you planning on buying a home and having children? When would you like to retire? All of these questions will help you develop a financial strategy that enables you to build the future you’re dreaming of. As you set goals together, get specific about the following:
- What are our top priorities?
- How much will it cost to achieve each goal?
- What is our timeline to achieve each goal?
- What are our obstacles and how will we address them?
- How will we earn/save the funds needed?
If you’re having trouble mapping out the details or you’re not sure how to overcome obstacles like credit card debt or overspending, meeting with a certified credit counselor can help. You can use your meeting as an opportunity to ask questions, get professional help with budgeting and building credit, and create a better strategy for your finances.
The Takeaway
As newlyweds, you and your partner get to create a future that is uniquely yours. If you leave your financial well-being up to chance, you may find yourself at odds with each other. Instead of hoping for the best, try to get comfortable discussing your financial dreams, challenges and frustrations. The sooner you do, the more likely you are to get on the same page and offer each other the support and encouragement you need to form a happy, life-long partnership.