For Richer or Poorer: A Newlywed’s Guide to Money Management

The time leading up to your wedding is filled with excitement, anticipation, and, often, a lot of planning. Last year, just over 2 million couples tied the knot, at a rate of 6.9 per 1,000 of the total population. Unfortunately, many of these couples fail to discuss and plan how they want to approach finances before marriage.

About 70% of married couples have already or will have arguments about money. Discussing finances causes more disagreements than any other subject, including household chores, snoring, togetherness, sex, or what’s for dinner. The top money quarrels regard spending (55%), saving (37%), lying (21%), and exclusion from decisions (11%).

The good news, though, is that discussing finances doesn’t have to be a negative experience. Disagreements over money can be effectively managed – whether you are a newlywed or deep into your marriage. Discussing financial concerns early is important, so we’ve included useful tips in this article to assist engaged couples and newlyweds begin talking. Even if you’ve been married for years, these pointers may help manage financial discord.

Talking Money Before Marriage

Regardless of the age you get married, couples considering marriage should address these financial topics.

• Before combining your finances, talk with your partner openly and honestly about money. Be upfront about the debts you currently have in your name – credit card debt, mortgage, student loan, car loan, medical bills, etc. – and what your credit score is. Develop a strategy together to plan how you will work through financial problems as they arise.
• Is one person in your relationship a saver while the other tends to spend money more extravagantly? Discuss your money styles and personal preferences. Do you prefer to pay with cash, check, or debit/credit cards? When making a large purchase, what is the dollar amount limit that you cannot exceed before discussing the purchase with your significant other?
• Determine your short-term and long-term financial goals. Talk about how you will deal with scenarios such as purchasing a home, having children or dependents, planning for retirement, traveling, paying for college tuition, health care crises, losing your job, purchasing material items, and having the experiences you both want. How will you deal with financial emergencies? How will you save for and spend your lifestyle expenses?
• Work together to develop a budget you can feasibly live by, and decide who will pay the bills and how they get paid. It is crucial for both partners to understand how much money comes in and how much goes out each month. Setting and tracking your budget will allow you to be realistic with these numbers. Then, figure out how much you want to save and how much each of you will use for personal spending.
• Decide the bank(s) you want to work with, and whether to utilize in-person, online, or mobile options available. How often will you check balances on your accounts to ensure you are staying on track with your goals? Are you going to use any money management tools or apps? Inquire whether your bank has any special apps or seminars for newlyweds or those combining finances.
• Failing to account for insurance costs – health, life, disability, auto, and home – can quickly derail your budget. Together, determine the policies that best fit your needs and how you will manage them. Agree upon contributions to employer-sponsored retirement plans, 401(k)s, and IRAs.
• Upon combining households and merging assets, oftentimes it may seem that you received extra discretionary income. Although it may be tempting to spend that money to enhance your lifestyle, it would be better to use the newfound surplus to pay off debts and loans or boost your savings. If possible, live on one income and bank the rest for the future. When unexpected issues or opportunities arise, such as a health crisis or backing a new business, you won’t feel powerless. Saving now gives you more options later.
• Create or update your wills, and change the beneficiary information on your retirement, investment, or insurance accounts.
• To reduce potential resentment in your union, eliminate the “it’s my money” mentality. When one spouse brings in more money and chooses to spend extravagantly, while the other is left clipping coupons and shopping for secondhand clothes, it can create martial tension. If you choose to have separate personal accounts, decide beforehand how they will be funded.
• Review your tax withholding, and look for ways to decrease taxes and maximize retirement savings.

Once you’ve made a plan, it shouldn’t be set in stone. At least once a month, set aside time with your spouse to review your plan, see if it’s working as anticipated, and make adjustments. Use this opportunity to talk about money, financial issues, and your progress and setbacks at this time. By working as a team and being open with your spouse, you can determine the methods that work best for both of you to decrease debt, increase wealth, and live the best years of your life your way.

Approaching Finances in Remarriage

For older adults, remarriage is becoming increasingly more common. In 2013, 67% of previously married adults ages 55 to 64 and 50% of previously married adults ages 65 and older had remarried. But when getting remarried later in life, you often have added financial considerations that couples in their twenties and thirties don’t have. For instance, if you are combining families, have adult children from previous relationships, or have individual financial portfolios, it is important to be aware of the potential financial impact of remarriage.

Before the wedding day, make sure to have a meeting with your partner to discuss finances, especially if one or both of you are still working, have children, and/or have significant assets. Honesty and clarity are critical to creating a successful plan. Below, we’ve listed topics for you to consider as you prepare to walk down the aisle again.

• Arrange a meeting or group of meetings with your new spouse to openly discuss your respective financial situations. Setting a specific time with an agenda will help you stay on topic and not forget crucial details.
• Introduce your financial advisor to your partner to ensure everyone is in agreement on how you want to approach financial planning as a couple.
• If you choose to combine your finances, eliminate surprises early on and honestly depict your financial situation. Consider sharing financial documents, including tax returns, pay stubs, bank and investment statements, as well as a credit report.
• Go over any contractual obligations you may have with former spouses.
• Discuss your long-term financial goals, including how you would like to support each other and any children or additional family members. Talk about any relevant guardianship issues that may occur or are currently in place.
• Develop a plan to guide you in dealing with the differences in each of your ingrained spending and saving styles.
• When there is an ex-spouse or children involved, or if there is a large socioeconomic gap between you, it may be difficult to merge your financial views. Take time to gain an understanding of the other person’s point of view and what their strengths and weaknesses are.
• If opening a joint checking account, define guidelines and boundaries for how that money will utilized. What is the maximum amount you can spend before you need to discuss and agree upon a purchase? Will you each keep separate accounts that focus on funding a dependent’s needs or education?
• Plans from previous marriages will need to be reviewed, including wills, trusts, and beneficiary designations. Work with your new spouse to develop a new plan that addresses all matters of “yours,” “mine,” and “ours.”

Discussing your finances can be complex – there are many layers to wade through and potential answers for each topic. However, if you start discussing your finances early and keep the line of communication open, it could save you more difficult conversations later – and potentially save your marriage.