“Finances have long been a trouble area in marriage,” says Julie Murphy Casserly, author of The Emotion Behind Money, “and the current economic crisis is stretching even more people to the emotional breaking point.”
Marriage season is in full swing. Countless couples will step up to the altar this winter. Most will spend a lot of time imagining their blissful life together. Some will make an effort to see how they can communicate better.
If these couples knew that many of the fights they were going to have throughout their marriage would be rooted in money and their financial choices, they all might take time to discuss and foster financial compatibility right now. Here are four steps to consider.
1. Have “the talk”:
Past romances are often discussed at nauseam by the second or third date. Past money habits, not so much! Now’s the time to be up front with your partner about your financial obligations and expectations.
Do you have any significant debts (mortgages, student loans, credit card debt) or financial skeletons in the closet (a bankruptcy or a poor credit score)?
Are you a saver or a spender—and, by the way, what’s your salary?
How do you envision your lifestyle together—do you live to save or save to live it up?
You and your future spouse don’t need to be totally in sync on every issue. (In fact, studies show opposites attract, particularly when it comes to money.) But it is important to figure out whether your personal finance habits and priorities are compatible for the long haul, and, if not, if there is room for compromise. Best to sort that out soon.
2. Tackle budgeting for two:
Your “single person” budget is not your “married person” budget. Figuring out how and when to pay your bills, deciding what’s an “acceptable” splurge, prioritizing goals like saving for a house or a car, and paying back your student loans: all of the choices that you once made alone now involve someone else. This can take some adjustment—especially if you’re accustomed to being your own financial boss. So get together and work through the numbers on paper. Calculate your income and expenses. Discuss how much you want to save and how much you want to invest each month.
Money Lover easy-to-use budget tools can help you both keep track of where your money’s going.
And be accountable to each other.
3. Divide (or don’t) and conquer:
You’ve discussed your preferred sides of the bed. So why haven’t you brought up if and/or how you plan to divvy up your money once you’re married? Will you maintain separate accounts, or will everything go into a joint account? Perhaps you’ll compromise by putting a certain percentage of each paycheck into your separate accounts and then depositing the rest into your shared pot—this can be for living expenses, long-term saving goals, or both. Be sure you have a system for keeping track of your accounts, because with two people writing checks and making debit card transactions or ATM withdrawals, it can get complicated. This is where report can be a huge help. Set up app notifications so that every time there’s a deposit or withdrawal, you’ll both be aware of it.
4. Deal with love and taxes:
And you thought picking a wedding invitation was hard. Your first time filing taxes as a married couple can be an ordeal, what with name changes, new addresses, and confusing income bracket switches.
You’ll want to consider whether you will pay more income tax filing jointly than you would filing separately (known as the “marriage penalty”), or whether your income taxes will go down when you get hitched (known as the “marriage bonus”).
How do you and your spouse approach finances? What are your favorite ways of working together to achieve financial goals as a couple? Please share in the comments below or on our Facebook page.