Managing Money With Your New Spouse

Decide how to manage your finances as a married couple before the wedding

Getting married combines your financial lives in important new ways. The choices you each make will also impact your spouse and affect the shared life you’re trying to build together. By making certain decisions before you walk down the aisle, you can start your relationship off on the right foot when it comes to handling your joint finances.

• Not sure how to assess your current financial situation?

  Start by putting everything on the table. Make sure you have a clear understanding of things like income, assets, spending habits and savings goals. Most importantly, be honest. Discuss how money makes you feel, who you trust with money and the financial situation you’re in. Decide what your money style will be as a couple.
  
  Understanding your total debt is particularly important when it comes to money and marriage. This could include student loans, car loans, credit card debt and medical debt. Discuss how you’ve each tackled your debt, and plan the best ways to pay it down as quickly as possible. You might even join forces to pay it together. And remember to disclose your credit scores. If your fiancée or spouse has credit issues, it could prevent you from making big purchases in the future. Use this time to work out how to improve your credit scores, if necessary. 

• Know your numbers.

  Figure out what money’s coming in and how you’re spending it. That means tracking all of your spending for a few months. You can do the work manually by creating your own spreadsheet and adding income and expenses, or with apps that connect to your accounts and can do the heavy lifting for you. Tracking expenditures will provide insight into each person’s spending habits, and can also help identify areas to cut back on, if necessary.

• Decide how you want to share expenses.

  There’s no right answer to the question “How should married couples split finances?” It’s a matter of finding a system that works for both of your spending styles. Two of the most common ways are: splitting everything right down the middle, or doing it based on income.
  
  Sharing everything 50-50 is common partly because it’s so simple. Each of you is responsible for half of your shared expenses, with the rest of your individual incomes available for individual expenses. This straightforward approach works well if you and your intended have very similar financial situations. The downside is that it doesn’t account for large differences in income, spending habits and individual debt.
  
  On the other hand, say you earn $90,000 and your partner earns $70,000, giving you a combined income of $160,000. It might be more fair to split things based on income − you pay 60% of the total shared expenses and your partner covers 40%. Each person still saves on bills by sharing them, but it can be a pain to renegotiate percentages as financial situations change.
  
  A third way to handle your expenses is to simply put both of your incomes in one big bucket, using it both to pay bills and for discretionary spending. Not having to figure out who pays what percentage is certainly easier, not to mention budgeting and tracking spending. But what if one of you has a taste for expensive things, while the other is a single-minded saver? Judging a partner’s spending habits can lead to resentment, especially if one of you earns more than the other.
  
  Remember, whether it’s smart to combine finances after marriage depends on your individual views on money. Knowing how you both approach managing money will help you decide the best way to handle your finances as a newly married couple.

• Organize your bank accounts.

  Now that you’ve decided how to split expenses, you need bank accounts to match.
  
  Keeping separate accounts might be the best option if one of you has significant debt, owns a business or is a bigger spender than the other, or you both value your financial freedom.
  
  For simplicity, it’s a good idea to have at least one joint checking account for paying shared expenses. You can use it to set up automatic payments for monthly bills like rent, utilities and so on. Questions to answer include: whose bank or account to use, whether there’s a benefit to primarily using one credit card, and how you’ll file taxes.
  
  Having both a joint account and separate, private accounts may be the best solution for managing your marriage and finances. You get the ease of tracking that comes with joint accounts, and you don’t have to deal with income disparities while paying the bills. In addition, each of you has the freedom to buy what you want, but still work together toward shared goals. The downside is that it requires keeping track of several bank accounts at once.
  
  A note on closing accounts: While closing a checking account doesn’t affect your credit score, closing a credit card may. If you have a credit card in good standing for a long time, you might want to keep it open and use it periodically.

• Set goals.

  Do you want to buy a house? Have children? Start your own business or get a higher education degree? Are your hobbies expensive? When do you plan to retire? It’s OK for you and your partner to have different savings goals. The important thing is to talk about them and decide what you want to work toward together.

• Start budgeting together. 

  It doesn’t matter how much or how little you make − all couples can benefit from budgeting to help them reach financial milestones faster. All you need to know is your monthly income and your average monthly expenses. The 50/30/20 budget rule is a great place to start. It suggests putting 50% of your monthly income toward things you need (like rent, car payments, groceries, insurance, etc.), 30% for things you want (shopping, eating out, hobbies and so on), and 20% into savings. Following this rule allows for some flexibility for each partner to decide how to spend their half of the 30%. Financial independence among couples is important for maintaining the individuality that healthy, supportive relationships are built on.

• Figure out the household logistics.

  Each of you should play a part in handling your finances. Decide who pays which bill, how you’ll reimburse each other, and how you’ll work toward shared goals. Sit down and discuss these logistics to ensure you both understand and agree on the plan for managing money, and that all of your bases are covered.
  
  While you’re at it, set a money date night. Pick a standing time each week or month, pour a couple of glasses of your favorite beverages and go over the budget. Make it a habit and it’ll automatically feel more natural. It’ll also give you the chance to correct money issues before they get out of hand.