Navigating Finances as a Newlywed Couple

Congratulations! You are a newlywed, and both of you are probably making adjustments to your new situation. While you may have talked about money and even shared some financial responsibilities before marriage, it’s important to talk about your money IN marriage. Couples rarely think exactly alike regarding their finances, so talking it through is essential to a healthy marriage relationship. Studies show that in-laws, intimacy and finances are the top 3 stressors in marriages. I’ll leave the first two areas for other experts in their fields, but here are some ways to approach your money as a married couple.

Read more: The Most Important Money Conversations to Have With Your Spouse/Partner.

1. Seek to Understand Your Spouse

Do you know your spouse’s money story? If not, now is an excellent time to discuss that. We all grew up in different homes and had different experiences as young adults in our relationships with money. Understanding where your spouse came from will help you understand how they feel about money now. If this subject hasn’t come up yet, it’s a good time to discuss questions such as:

1. What did you think about money growing up? 
2. Would you say you are a more natural spender or saver? 
3. Do you have a budget, and how do you manage it? 
4. How did your upbringing impact the way you think about money now? 
5. Are you more of a risk taker or conservative in your investment approach? 
6. What would you like your spouse to know about your perspective on your finances? 

Take time to be curious and ask questions without judgment. After all, you’re married, and this should be a safe place to be vulnerable with your spouse. Money is emotional. These conversations are helpful to deepen your understanding of where your spouse is coming from.

Learn More: How to Have a Healthy Financial Relationship With Your Partner

2. Write Down Your Priorities as They Relate to Finances – Separately!

Take 10 minutes together, and each of you write down your financial priorities. Money is never a money issue but it is a priority issue. Making decisions about your finances may be easier if you can identify your priorities and understand where you line up as a couple. One spouse may have a strong desire to retire early, and one may want to do more travel now while they are younger. After discussing your individual priorities, you’ll have to determine your priorities as a couple. This conversation is hard to do without a third-party person, such as a CERTIFIED FINANCIAL PLANNER^TM, to guide the discussion and help you come to a solution. Having the conversation to bring your priorities together as a couple enables you to make decisions about where to put your hard-earned income.

3. Accept That You Are One Financial Unit

We all want a thriving marriage relationship with our spouse and to enjoy peace and harmony with the person who is our number one! But a mindset of “my money vs. your money” can get in the way of that, especially if you are a couple with a significant variance in income levels. Divisive thinking around money can creep into our minds and erode unity within a marriage. Just as the government now sees you as one unit and requires you to file taxes as “married”, whether you file jointly or separately, it may help to think of yourselves as one financial unit.

4. Decide How You Want to Handle Money Together

Unless you got married right out of high school, you've had some time to develop your spending habits and plans. The longer you have financial independence, the more challenging it may be to handle your money together. There are three basic ways to handle money jointly:

1. 1. Operate Separately: Divide Shared Expenses Equally
      Using this method, couples divide their shared expenses equally and each person pays the same amount toward the expenses. Shared expenses typically include your housing payment, utilities, home maintenance and joint experiences (food, travel, entertainment, gifts, etc.). Many couples have a joint bank account from which these bills are paid. The remainder of the living expenses (clothes, hobbies, transportation, insurance and personal care) are paid by each person from their separate accounts. As couples continue to blend their life, many move away from this arrangement to mix more of their finances.
      
      
   2. Pro-Rata Arrangement: Divide Shared Expenses Proportionally
      This arrangement works well when there is a large discrepancy in income. The shared expenses are divided based on each spouse's income, and each person contributes proportionally to each expense based on income. For example, if one spouse makes $120,000 annually and the other spouse makes $80,000 annually, and their monthly home payment is $2,000, the $120,000 earner would pay $1,200 and the $80,000 earner would pay $800 of their monthly home payment. Applying this method to all the shared expenses provides a more equitable way to share expenses. It also takes time to figure it all out. You’ll need to consider what happens when someone gets a bonus, loses their job or changes their salary. How do you handle that? What items are considered shared expenses? Who will pay for them, and how will it be funded? All of these are questions to consider before selecting this option.
      
      
   3. Merge Everything and Share Everything: What’s Mine is Yours
      Using this method, all your expenses are considered joint expenses, regardless of individual income. You can create a joint account or maintain separate accounts. Deciding what shared expenses are paid from the joint account and how much to put into the joint account are all conversations to have with your spouse. All income and expenses are shared, and each spouse can use the shared buckets of income and savings. With this method, it's important to determine what requires a conversation for a purchase – is it anything over $100? $500? $1,000? The answer will depend on your financial situation and your goals. This option is the easiest one to work with when both spouses are comfortable discussing who is responsible for paying bills or purchasing items for the family, and trust and requires a high level of trust. We find that those who are together longer eventually merge their finances to this option. 

At the end of the day, open communication about your financial stories and the way you will operate as a united team in marriage will help you to develop trust and strengthen your relationship as you build a solid future together. A CERTIFIED FINANCIAL PLANNER^TM professional can provide valuable guidance as you navigate some of these conversations to determine your joint financial goals and priorities. Whatever method you choose, it’s important to be sure you’re both on the same page and feel comfortable moving forward.