In a marriage, you will need to work together to reach your shared financial goals. If one of you has an unhealthy relationship with debt, it impacts both of you.
“The more you spend on credit cards or interest, the less you’ll have to save for your future,” says Greenwald.
How will you work together financially
Talk about your expectations for your marital finances and try to get on the same page about budgeting, savings goals, and how you’ll handle discretionary spending. If one of you likes to spend your extra cash every month while the other likes to save for big purchases like vacations, you’ll have to navigate those two different viewpoints in a way that doesn’t build resentment over time. You may have to compromise on how much you save each month for shared goals or make room in your budget so that each of you has money for some personal spending in addition to your savings. it might be worth talking to someone financial advisor Who can give unbiased advice about budgeting for your different styles.
You also need to figure out how you will manage your finances. If one person is more money-savvy than the other, it may be appropriate for them to take the lead on budgeting and overseeing the household finances. However, both partners must have knowledge of their shared finances. If the money-managing partner dies or becomes disabled, the other person should be able to access their financial accounts and make sure their bills are paid.
your financial goals
Take some time to set your personal and shared financial goals and how you will achieve them. This may include:
- Retirement: discuss how you planning for retirementThat includes your current savings rate, when you want to retire, and how much you expect to save.
- Buying a Home: if you’re planning to buy a houseYou’ll need to work together to save for a down payment. Additionally, if either of you have a bad credit history, you’ll need to figure out how you plan to improve your score so you can qualify for a mortgage.
- Holidays: Coordinate on travel spending, including how many trips you want to take each year, how much to spend per trip, and whether you’ll both put money toward your travel goals each paycheck.
- Family Financial Planning: If you plan to have children one day, you should talk about what it means for your finances. If you both work, you’ll need to determine whether you’ll pay for daycare or one of you will stay home to care for the child. You should also decide whether you want to open a college savings account for your children and, if so, how much you will contribute to it.
- Other major costs: If you envision starting a business one day, share that with your partner. If your car is in bad shape and will need replacement soon, talk about your plan for it. If your family members help you financially occasionally or regularly, make sure your partner knows about it.
How to handle debt and property
If you or your future spouse is bringing debt into your marriage, there’s no one right way to handle it — it just depends on what’s important to both of you. Each of you may want to continue to individually pay off any outstanding debts after the wedding. Alternatively, you may decide to work together to pay off the debt, even if the debt is not yours.
You should also discuss how you will handle the financial assets you bring into the marriage, as this may have legal implications in the event of divorce. State law controls how property is divided between divorcing couples, but in general, property acquired during your marriage is considered. matrimonial property Whereas property you owned before your marriage is considered separate property. However, when you combine assets (such as transferring pre-marital savings to a joint bank account), this separate property may become marital property.
Should you combine finances or keep them separate?
Determining whether to combine your finances is another area of marital financial planning where there is no one-size-fits-all approach.
Combining accounts can make it easier to manage your shared finances transparently and better understand how much you are earning and spending each month. However, this approach can also make partners feel that they have less financial independence. On the other hand, keeping your finances separate can make it harder to align financial goals — but it can help each partner feel like they have some flexibility and freedom.
“There’s still some power in having your own bank account,” says Greenwald. “I think it’s still important to have your own bank account, your own credit card.” Having your own accounts can ensure you still have money if you are unable to access your partner’s account.
Some couples prefer a hybrid approach, where they have a joint bank account And their own personal accounts. However, this method can have its own challenges as it requires managing additional accounts and ensuring that you are contributing enough to your shared account to cover your expenses.
Jacobson says the right approach may also depend on each partner’s history with money and relationships and whether they feel they have enough financial freedom and security.
“At the end of the day, you want your partner to feel safe and respected,” she says.
Legal and financial protections to consider
Life is unpredictable, which is why it’s important to make sure you’re protected if the unexpected happens, whether it’s divorce, death, or a financial emergency.
As a newlywed couple it often seems taboo to talk about prenuptial agreements or prenups, but they can provide vital financial protection for both partners. These legal documents detail how your property will be divided in the event of a divorce.
A prenup isn’t strictly necessary for every couple, but it can be a smart move if you’re bringing substantial assets into the marriage, have children from a previous relationship, own a business or want to protect an inheritance.
In addition to protecting yourself in the event of a divorce, you should also plan for other unexpected life events by making sure you are both properly insured. This may also include purchasing insurance for your major assets (such as your home). life insurance policies For both of you.
FAQ
Should couples merge bank accounts before marriage?
Since many couples are combining other aspects of their lives together before marriage, it may make sense to merge some of your finances and maintain a shared bank account. However, depending on your situation, it may be risky to completely merge your bank accounts with a partner you are not married to. If you separate, it may be more difficult to separate those assets if you are unmarried.
How do you talk to your partner about debt?
When it comes to debt, it’s best to be honest and upfront with your partner. Look at the debts each of you owe, including the balance and monthly payment amount, and discuss your payment plans for each account.
Is a prenuptial agreement necessary?
A prenuptial agreement is not always necessary for every couple, but it can be important for partners who are bringing their own assets into the marriage that they want to keep separate.
Which financial documents should be updated after marriage?
Once You’re Married, Work With Yourself estate planning advisor Or a lawyer to update your estate documents (such as your will or trust document) to include your spouse. Additionally, update your beneficiary designations on any accounts that pass to your spouse in the event of your death, such as your retirement accounts or life insurance policies. You may also need to adjust withholdings on your paycheck if you plan to file taxes jointly.