4 Tips for Newlyweds Combining Finances
Marriage is an exciting milestone that often leads to big changes — and that includes your finances. Since your joint money habits will affect your future financial security, it’s important to create a shared plan early in your marriage. So, it’s time to talk about money! While financial conversations are historically troublesome, they don’t have to be a major roadblock in your relationship. Follow these tips to successfully unite your financial lives, avoid common pitfalls, and achieve your goals together.
Have the talk
When you get married, you becomes we, which can feel like a big shift. So, to successfully marry both your lives and finances, open communication is key. Talking about money can be uncomfortable. And getting on the same page now doesn’t mean you’ll never have difficult conversations in the future, but it will help you lay the groundwork for a healthy communication style.
Set aside time to talk about your individual money motivations, financial goals, and any debt, assets, or liabilities you’re bringing into the marriage. Then look for commonalities. The two of you may have student loan debt to pay off but also want to buy a home together in the next 10 years. Identifying shared financial goals will provide the framework for spending and saving in the future.
Don’t panic if your goals or motivations are different. If your spouse wants to invest and grow a nest egg and you want to start a family, it doesn’t have to be an either/or situation. Discuss financial strategies that will satisfy each goal.
Start budgeting
To help work toward your financial goals, create a budget that takes your newly combined monthly income into account. Then calculate your combined expenses. Focus on the necessities first, including rent, recurring bills, and the priorities you established during step one: the talk. Set aside money to build a healthy emergency fund as well. Once you’ve factored in your fixed and variable expenses, you’ll know how much you’ll have left over for discretionary spending.
Determine a banking strategy
Now that you’ve merged your finances and created a budget, you’ll need to decide how you want to split financial obligations like bills, savings, and day-to-day purchases. Will you and your spouse combine bank accounts or maintain separate ones? Maybe you’ll opt for a hybrid approach — joint accounts for mutual expenses and separate accounts for discretionary
spending.
There is no one-size-fits-all approach for managing your accounts. Consider taking the time to explore the advantages and disadvantages of each strategy to determine which one works best for both of you.
*Pro-tip: You should be also prepared to make decisions about credit cards, credit histories (if you plan on applying for financial products together), and how you will file your taxes.
Put your relationship first
Making your finances a priority from the start is the best way to establish a healthy relationship between your marriage and your money. But finances come with baggage that can often be tricky to navigate, and you can’t let that baggage affect the health of your marriage. It can be easy to overlook feelings or the state of your relationship when you’re busy trying to find financial strategies that work for you as a couple and individually. But you must always remember to put respect first.
Though it might feel a bit overwhelming at first, working together to combine your finances is a great way to create a happy (and maybe even wealthy) life together. But remember, money isn’t everything. Share your goals and values through open dialogue and enjoy the honeymoon phase!