You and your partner may want to have the “money talk” early on to help get your finances in order and alleviate the stresses that come with marriage and money. Financial issues are viewed as one of the major reasons of marital discord. Combining finances along with budgets and goals on top of monthly household expenses can become quite stressful. With the pressures involved in starting a new life together, many couples unfortunately do not discuss or deal with their finances until it becomes an issue. They are busy, forget or don’t view it as an important matter. Without a financial plan in place, money issues can cause anxiety, stress, and insecurity leading to arguments.
Merging of finances is traditional however it doesn’t mean it’s easier or requires less discipline. We see many couples who choose to combine their finances in joint accounts. The goal is to stay organized and always stick to a budget by living within your means. Discuss upfront how expenditures are going to be paid for and handled. By doing so, it will result in a lot less disconnect and will help structure the combining of finances appropriately. On the other hand, if each of you is going to manage your own finances, make sure to create a budget that includes not only your monthly expenses but the money that you are going to need to save. Don’t forget to save for covering emergencies and future financial needs such as purchasing a home and retirement savings. Each partner should contribute into the communal kitty before making personal expenditures so neither is light when the bills need to be paid. One of the benefits of joining households is that it creates efficiencies that can lead to cost savings. Many newly married couples miss the opportunity to invest early in their marriage because they weren’t proactive about saving. There may be multiple opportunities to sock away money, but if as a couple you haven’t determined what you are going to do with the extra money, it can easily become an excuse to spend. There may be some financial concerns that need to be addressed once you’re officially hitched.
The tips below can help ensure you have everything in order for your new life together.
• What do you own and owe? Create a plan to pay off any debts and decide who is responsible for them. If only one spouse has outstanding debt, decide if that spouse alone will be paying it off or if it’s a team effort.
• Emergency fund! Ideally you should have between three and six months of expenses in a liquid savings account. This is money that you shouldn’t touch unless there’s a financial emergency. Decide to set money aside each month until you hit your target amount!
• Discuss financial priorities: Talk about your financial goals both short and long term such as
owning a home, children and saving for retirement. This will allow the both of you to have a
better idea of how much you will need to put aside and accumulate to meet these financial
• Update beneficiary information: This goes for your will, life insurance protection through your employer and any personally owned policies. If you have a pension plan through your employer ensure your spouse is also listed as the beneficiary in the event you were to predecease him/her.
• Compare financial “philosophies”: If you have different views in your financial philosophies
(e.g., if one of you is a saver and one of you is a spender), don’t think that your differences will
“just work themselves out.” While sometimes they may, most likely won’t unless you can come
up with some type of mutually acceptable financial plan. Don’t be afraid to have the difficult
conversations where finances are concerned. It doesn’t mean you love your partner any less; it
just means you’re a responsible adult.
Marriage and money isn’t the easiest, but the best thing you can do is be open and honest. Start off on the right foot by talking about money management and coming up with a financial plan to deal with budgeting, saving and investing. The sooner you do this, the better. If you form good money management habits as a newly married couple, you’ll be able to work as a team through whatever life throws at you for many years to come!
About the author: Parkview Wealth Management is an independent advisory firm providing wealth and estate planning strategies to business owners, professionals and families. Focused exclusively on building and preserving wealth, we deliver a disciplined approach to retirement income generation, minimizing taxes, risk management and portfolio management.
Disclaimer: The information in this article is of a general nature and does not take into account your individual objectives, financial situation or needs. The content should not be relied upon, or treated as a substitute for specific financial, insurance, legal or tax advice. Individuals should seek their own independent professional advice to discuss their personal circumstances before implementing any type of arrangement.