financial planning for newly married couples

How to Handle Finances as Newlyweds

Marriage is the beginning of many new adventures that include joining finances. It is one of the biggest challenges among newlyweds. You and your partner may have different budgeting strategies, spending habits, and monthly expenses that you weren’t aware of before. Finances in marriage have led to many fights and differences of opinion among couples. 

You might have already seen some of these habits while planning your wedding. Don’t wait a few years into your marriage to have that money talk. Let’s talk about ways to have a healthy discussion for starting a new phase in their financial journeys as a married couple. 

Why You Need a Plan for Combining Finances

Financial planning for newly married couples is not one of those conversations you want to have after the honeymoon. Financial compatibility can make or break relationships. It’s all too common for couples to fight about finances. Some couples are even surprised to learn that they have different views on money management when they have agreed on other topics. For example, your partner may not practice managing salary as detailed as you. Their spending habits may also be very different from your own.

It’s important to remember that you are marrying a partner and their finances. You should know everything about each other’s finances well by tying the knot. Lay it all out there, from how much debt you have to the type of assets you have. Relationships are all about trust, and this is especially true when it comes to finances.

Talking Finances Before Getting Married 

Ideally, it would be best if you had conversations about money before tying the knot. Here are some financial topics you should discuss to get you financially prepared as a couple.

Talk about Priorities

Couples should have similar values, beliefs, and priorities in life to have a successful marriage. It will be a challenge if your partner doesn’t want to leave their hometown while you want to move to another coast. So talk about what each of your financial priorities is. Questions to ask each other include:

  • If you want to have kids in the future, how much financial support do you want to provide them? I.e., Do you want to cover their full college education?
  • Do you prioritize saving money, or would you rather spend more freely?
  • What amount of your income do you want to spend on necessities? What about luxuries?

Asking these questions will help determine what type of priorities each of you have. If you find that you have some differences, then work on finding a compromise. That way, you’ll avoid a future argument about finances. 

Put together a List of Goals

Reaching your financial goals will be easier if you’re both working together to achieve them. It also ensures that your goals are aligned and not contradicting each other. Do you plan to own a home or prefer renting? If you both want to buy a house, what do you need in a home? Do you want a brand new, luxury home in a gated community? Or is it a fixer-upper that you could renovate to match your tastes more your style?

Put Together A Budget for the Wedding

This is your biggest financial goal that the two of you will have to make first. It’s also where the tension between couples tends to start. There is so much to plan and move pieces that it causes stress. The cost of a wedding is one of the major factors of a couple’s stress. 

A modest wedding could save tens of thousands of dollars. But some couples want to throw a lavish event at a premier location, open bar, etc. Keep in mind that the more you spend on your wedding, the less you’ll have for other goals. If you plan to buy a new house, that goal might have to be delayed as a trade-off. Decide as a couple how much you want to spend on your big day. Budget how much you want to spend on everything from decorations, flowers, food, appetizers, drinks, entertainment, and more. 

Consider a Prenuptial Agreement

A prenuptial agreement is a legal document determining how assets are split if a couple’s marriage fails. These agreements aren’t for everyone, though they’ve become more popular lately. No one wants to think about their marriage failing. However, a prenuptial agreement might make sense if you have a lot more assets than your partner. 

Financial Planning for Newly Married Couples

How do you manage money as a newly married couple? It’s going to depend on what you and your partner come up with. Here’s a couple of budgeting strategies to think about for your relationship:

  • Separate accounts – If both of you don’t have many shared expenses, this might be the most comfortable starting point. There’s likely a difference in the income level and monthly expenses (including debt) that each person brings. As a couple, you will have to agree on split shared bills, but this method will mitigate arguments about the other’s spending. 
  • Joint accounts – This simplifies money management and makes it easier when children come into the picture. A household budget planner is much easier to keep track of when resources aren’t divided. Keep in mind that if one partner spends more than the other, that could lead to problems, particularly when one earns more. 
  • Separate and Joint Accounts – How these methods work is that all income goes into a joint account, and savings, debt, and retirement funds are managed jointly. Each partner has their separate checking account or “personal fund” that can be spent; however, they choose. 

It’s not just bank accounts that get combined when a couple gets married. Talk about the credit cards that each of you has. Some credit cards will let you have a joint account that allows both of you to use the card and be responsible for paying it. Others will let you add a spouse as an authorized user on the card. The control over the account and the responsibility of paying the bill will belong to you. Your spouse will get a card in their name, which they’re authorized to use.

Taxes are another factor to consider because of their implications if either of you has income-driven student loan repayment. You could become ineligible for some income tax deductions if you file as “married filing separately.” Your marital status also could put you in a different income tax rate. Whether that rate is higher or lower depends on what your combined income comes out to be. You should talk to a tax specialist for help on this topic. 

Finances in Marriage

Some other tips to talk to your spouse about include:

  • Work together on managing debt, being debt-free is beneficial to both of you.
  • Save 10% by managing salary, so you don’t have to live as a couple “month-to-month.”
  • Talk about your credit report and scores because once you start looking at buying a house together and other financial goals, they will affect you.
  • Cut down on overlapping expenses when possible.
  • Make a list of each of your assets and liabilities. Be upfront about where your financial state, so you work together on your shared goals. 

Creating Financial Goals Together

Retirement savings will become an important source of income later in your life. Talk about financial goals like this together and make a plan for it. Let’s say that one of you will continue to work while your partner will quit their job. The working spouse should continue to contribute to their work 401K, and the non-working spouse should have an IRA that also receives funds. 

Budgeting for Family

Kids not only change your lives but your personal financial lives too. Whether you plan to have children shortly after getting married or waiting for several years, start the budget now. It will make budgeting for family an easier transition. You should both work on the family budget together and work towards a compromise. 

The key to being financially successful is a budget that works. Work on paying down existing debt and lowering your expenses as a couple. When it’s time to start planning for a baby, they’ll be more money for diapers, daycare, and all the other expenses that bring. 

Household Budget Planner Tips

Managing money as a couple can be stressful at times. Here are some tips to use that will make it easier to handle budgeting as a couple:

  • Use a budget app that allows you both to co-manage your finances. 
  • Don’t buy more house than you need or rent an apartment with all the “bells and whistles.”
  • Meet monthly as a couple to check in on your budget and review your progress on goals
  • Shop around for everything (groceries, insurance, etc.) and switch to save

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