Between popping the question and saying “I do,” you and your partner have plenty of planning to do. While it’s not as much fun as cake tasting, financial planning for newlyweds should be a high priority, too. There are just certain things that need to be discussed to avoid potential stress later. According to a survey offered by Psychology Today, 27 percent of respondents found money to be the biggest source of anxiety and stress in their marriage.1 Make a point of sitting down together and discussing your expectations about your future finances to help minimize that stress.
Having open, truthful discussions about money before you get married can help lay the foundation for an honest and meaningful financial relationship down the line. As you get ready to tie the knot, take these five financial considerations into account first. Think of it as an investment towards a happier life later - you'll be glad you took that time, I am confident of that.
Consideration #1: Financial Influences
By this time, you’re likely familiar with what your partner’s childhood was like. That said, an aspect of his or her past you may not have discussed is how finances were handled in their household.
Were the parents who raised your partner frugal, coupon-clipping savers? Or, did they splurge on extravagant dinners and shopping trips every weekend? Dig deep into how your partner’s parents may have shaped their attitudes about money. Once all expectations are out on the table, you can begin coming up with a strategy for how you'll handle your money as a couple. Use this discovery time wisely - it will pay dividends down the road.
Consideration #2: Take Stock of Your Financial Triggers
Some people are stress-spenders, while others spend money when they’re bored. Peer pressure from friends or family can also trigger unnecessary spending. Whatever it is that tempts you to go over budget, it’s important to identify the triggers and make your partner aware. Spouses can be great accountability partners and you can help each other stay aware and on top of the poor spending habits either of you may have. Remember, you're on the same team and you're promising to be there for each other. This includes keeping the financial house healthy.
Consideration #3: Decide on Joint or Separate Savings
One of the biggest financial decisions you need to make together is determining whether or not to combine your finances into a joint account. If you both earn an income, you may want to keep things separate in order to reserve your own discretionary income. On the other hand, it may be more practical to funnel a certain amount of your earnings into a joint account dedicated to paying monthly bills like your mortgage, car payments, insurance, etc.
If you decide to combine your finances, it's even more critical to sit down and discuss your spending/saving strategies with each other.
Consideration #4: Decide Who Does What
Does one of you cook dinner and the other cleans up afterward? Maybe somebody does the laundry and grocery shopping while the other cuts the grass and does yard work. Just as you’ve developed a system for handling chores between the two of you, you’ll also want to determine who plays what financial role. If one of you is more interested in investing, that's who could take the lead on managing your portfolios. If one of you is more organized, they could handle paying the monthly bills. Either way, you’ll need to write a list of all your financial tasks before determining who should do what moving forward.
Consideration #5: Talk About Taxes
While we tend to only think about taxes once a year, you may want to get a head start on determining how you plan to file next year. As a married couple, you’ll have several options, including married filing separately, married filing jointly, choosing a head of household, etc. Talk to your accountant early on to determine which filing strategy may be best for you. This decision could influence other aspects of your finances, which is why it's a good idea to determine your strategy early on.
Getting married is an exciting time, and the days after you both say “I do” will be a whirlwind. Before you tie the knot, though, sit down with your partner and have a serious discussion about your finances as a family moving forward.It will most certainly save you headaches down the line!