Tips for Managing Money as Newlyweds
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While the divorce rate in America has been declining, it still hovers between 35% and 50% in any given year. Aside from cheating or a lack of intimacy, money is one of the number one causes of divorce. As such, if you’re just getting started as a married couple, getting on the same page about money is vital.
Money can be a difficult topic to discuss, and many married couples come into their marriage inheriting different money habits and ideas about personal finance from the way they were raised. As a result, part of financial planning for your family finances is about combining philosophies as much as it’s about having to combine finances.
If you’re recently married or about to get married, congratulations! Now is a great time to get on the same page as newlyweds. From managing joint bank accounts to balancing monthly expenses, here are tips newly married couples can use to plan and achieve their financial goals effectively.
In this article
Set financial goals
When you get married, you vow to do a lot of things for your significant other. You vow to love them, stick with them through thick and thin, and show up in all meaningful ways to you and them.
Just like your love is a strong foundation for your marriage, it’s equally important to have a strong foundation for your financial situation. When you set goals as a couple, you get something to work towards together, ultimately bringing you closer to your spouse. Here are some goals you and your partner may want to set as you plan your financial future together.
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Paying off debt
Many couples enter into a marriage with debt, and that can make it difficult to manage their daily or monthly finances. Especially if one partner has a lower credit score, it can be important to get your credit history cleaned up sooner than later since major purchases like cars and homes rely on both partners’ creditworthiness.
Whether tackling student loan debt, credit card debt, or medical debt, having someone by your side can be the motivator necessary to clean up your finances. Make clear goals and talk about the sacrifices that may need to be made by your family as you pay off debt aggressively so that both partners understand why you’re making these choices.
Buying a home
Conventional wisdom is to not buy a home with a significant other unless you’re married due to the legal obligations of homeownership and the high value of debt that a mortgage typically represents. Now that you’re married, though, you may be chomping at the bit to get out of renting an apartment and into a single-family home!
Talking to a mortgage lender can help you formulate a budget for saving for a down payment in buying a new home. Keep in mind that just because you’re expected to be approved for a certain mortgage amount doesn’t mean that you should pay that much for a home. It’s important to be clear about what you and your partner need versus what you want as you start saving for a home together. While dual-income households have more buying power, you can quickly buy too much home without being careful.
Saving for children or college
Many couples that get married start thinking about family planning. Having a child is a major expense, and it’s easy to oversimplify how much raising a kid can be. From clothing and diapers to extracurriculars as they age, medical costs, and even daycare, summer camp, or school, the cost of being a parent can be quite high.
This is without factoring in if you and your spouse plan on helping your child pay for their education in college. There are a lot of pros and cons to paying for tuition for your child, so it’s best to have that debate sooner than later if you plan on starting a family with your spouse.
Investing for retirement
Part of getting married is about having someone to share your life with. That should be extra motivation for you to so that you can enjoy life as you and your partner grow old together. Investing for retirement via company or individual retirement accounts is a great way to achieve these goals.
You can work with a financial planner or do your own research and manage things individually if you’d like. Just be sure that you and your partner are on the same page when planning for the rich life you want to lead.
Create a budget
Budgets get a bad rap for being restrictive and prohibitive. However, if you are intentional with your financial goals and realistic about your income, you may be surprised by just how freeing a budget can be. Especially if you’re hoping to avoid marital issues by staying on top of your money, a budget is the best thing you can do for yourself and your partner. Here are a few things to keep in mind when creating a budget.
Pick a budget style
Did you know that different people prefer different approaches to budgeting? Whether you’re using the envelope method, an app like YNAB (which stands for You Need A Budget), or a spreadsheet, it’s important to find an approach to budgeting that works for you and your partner.
Some people like to think big picture, while others enjoy tracking every penny they spend. If one partner decides that they are going to be the budgeter in your relationship, that’s totally okay. Just be sure to have regular meetings about your budget so that both partners are involved in financial decisions.
Have budget meetings
Once you’ve determined your approach to budgeting and gotten on a conscious, written spending plan, it’s important to keep up to date with your partner by discussing your budget. Regular budget meetings can be monthly, bi-weekly, or weekly.
The important thing is to have an agenda where you go through the following aspects of your budget:
- Are there any irregularities in your income this month?
- Are there any unexpected purchases that you weren’t initially planning for? (Think of things like the water heater failing or your car needing new brakes)
- Are there any upcoming commitments that may necessitate a reallocation of your funds? (Think things like friends coming from out of town who will want to try that new pizza spot or a wedding you’ll need to travel out-of-state for in a few months)
At your budget meeting, both partners can discuss how things are going, forecast future expenses, and react to things that cost more than were initially budgeted for or came out of nowhere.
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Build an emergency fund
When you have financial peace in your home, you often have peace in your marriage, too. That’s something that can be offered by saving up an emergency fund. Emergency funds should be saved in a savings or checking account for easy, liquid access. This should go without saying, but it’s important that your emergency fund is only used for emergencies — not things you just forgot to budget for but could have anticipated.
How much should you save for your emergency fund? That varies from couple to couple and household to household. If you don’t have an emergency fund, saving up at least $1,000 can be a major confidence boost and give you some peace of mind while you work on other aspects of your finances.
If you’re a dual-income family with pretty solid job security, you may be comfortable saving up a month or two of your normal household expenses. However, if the pandemic really rocked your world and you’re more risk averse (or you’re a single-income family), saving up six to twelve months' worth of expenses could make you feel far more comfortable.
While nobody wants to think about emergencies happening, it’s important that you and your partner are realistic about the ways that you could get into trouble financially. From there, you can build an emergency fund that helps to dispel those fears.
Weigh the pros and cons of insurance
Various insurance companies will likely come knocking on your door once they find out you and your partner are married. While it’s true that insurance is an important thing to consider as a married couple, it’s also important to be wary of deals or policies that seem too good to be true. For example, there’s a difference between whole life insurance and term life insurance.
You may already get health insurance from your employer, and if both partners work, you’ll need to determine whose health insurance is better. If one of you doesn’t have a life insurance policy offered through work, that may also be a good idea to look into. Usually, when one partner passes away, the life insurance payout should be immediately invested (with a financial advisor if you’re unsure how to invest) to help provide a more sustainable financial situation.
If you own vehicles or eventually buy a home, you should consider car insurance and homeowners’ insurance. Insurance companies often bundle policies to save money, so make sure to shop around for the best insurance companies in your area before just sticking to who you’ve been with for years without thinking twice.
Insurance becomes even more important if you decide to have children. This is another major life event that predatory insurance companies will try and take advantage of, but that shouldn’t deter you from getting the appropriate coverage for you and your family. With some research, you won’t be talked into making an emotional decision you’ll regret later down the line when you see just how bad your policy is.
Tackle finances together
This should be obvious, but tackling your finances together is essential. As a married couple, you are a team, and the support you get facing financial problems (or working towards financial goals) together is hard to overstate.
While many people think of finances as divisive, once you start communicating your wants and needs, you may be surprised at how tag-teaming your finances as a couple brings you closer together.
Even if you’ve chosen to keep separate bank accounts, talking frequently about how you will approach your financial goals is pivotal to your relationship. By being involved with your home's financial aspect, you ensure that both partners have their needs met and feel seen in the life you are building together.
Communicate
Communication is important in so many aspects of marriage, and that’s just as true for your finances as it is for any other part of your relationship. When talking about your financial needs, dreams, and goals, you ensure that you get heard in your relationship and that those ideas are considered.
Communication doesn’t always have to be about struggling with debt paydown or admitting that you went over budget at a baseball game with your friends, either! Communicating about dream vacations or a goal to provide a great education for your future children can help bring you closer together as a married couple.
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The bottom line
These financial tips are a great place to start if you’ve yet to talk much about personal finances with your partner. From reigning in or understanding each other’s spending habits to deciding whether or not it makes sense to open a joint account, there are all sorts of topics to discuss regarding finances and marriage.
Every couple has its own situation and priorities; however, things like investment accounts, finding the right insurance policy, and emergency funds are all financial topics every couple should tackle together. Beyond that, you may also choose to pay down debt or save for homeownership together.
Marriage is an exciting milestone in any couple's life, but it’s just the first of many. With clear goals and a solid understanding of your financial situation, it’s possible to build the life you and your partner really want together. If you use these tips to start planning your financial goals for the short-term and long-term you’ll be well on your way to achieving many more milestones together.
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Writer
Brent Ervin-Eickhoff is a Chicago-based writer, stage director, and filmmaker with a background in digital marketing and content creation. In addition to Joy Wallet, Brent has written for Complex, Volkswagen, HowlRound, Picture this Post, and Third Coast Review, among others. He currently serves as the Associate Director of Marketing for Content Creation at Court Theatre at the University of Chicago. Brent graduated from Ball State University with Academic Honors in Writing.
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