Communication in marriage can be a challenge. With each spouse having a different viewpoint on situations, what one person thinks is important, the other may not equally prioritize. When you layer in the often-uncomfortable discussion around money, it is no surprise that marriage finances are a touchy subject.
In fact, conflicts about money are the leading cause of marital strife and, ultimately, divorce. But that doesn’t mean marriage and money have to mix like oil and water. Consider these seven steps to achieving a healthy relationship between your marriage and your money.
#1 Learn each other's financial personalities
Everyone has certain financial inclinations that are part of their natural personality. Savers vs. spenders, debt attraction vs. debt aversion and high-risk vs. low-risk (with regard to investing) are a few good examples.
If you're open and honest in your financial discussions, these will become apparent, and you can go into your marriage aware of them and how they will impact financial decisions you make as a couple. Often, conflicting financial personality traits – maybe you're a saver and she's a spender – serve a marriage well, as the extremes can help offset each other and make it easier to find a middle ground.
#2 Assign financial responsibilities
After you've talked openly and honestly about finances and gotten a good feel for each other's financial personalities, you should have an idea of which of you is best suited to handle specific financial responsibilities.
Sometimes, it's obvious that one partner is the perfect candidate to handle the bulk of the family's financial tasks like bill paying, saving, investing, retirement planning, etc. Even then, though, experts stress that both partners should have a hand in family financial management. For one thing, this will help prevent misunderstandings and arguments in the event of financial setbacks or crises (like a major expense or loss of money due to falling markets). Perhaps more importantly, this will make it less likely that one spouse has to pick up the financial pieces with little or no knowledge of the situation should their spouse become incapacitated or die unexpectedly.
“One partner may be a perfect candidate to help with key aspects of finances in your marriage.”
#3 Discuss the merger and/or separation of finances
Obviously, you and your spouse will likely come into marriage with your own separate assets, like checking, savings, investing, retirement or other accounts. The combining and/or separation of these assets can be one of the most touchy and sensitive areas of marriage and money.
There tend to be two schools of thought here. One is that the assets should remain mostly separate, with spouses continuing to fund their own accounts from their own earnings after marriage, and then split all living expenses either equally or proportionally (based on each spouse's income). The other is that the assets should be merged together into joint accounts that are co-owned by the couple and used to pay living expenses as well as for savings and investments. Each couple should decide for themselves which method will work best for them, or you can find a middle ground between these two options: creating a joint checking account to fund living expenses while maintaining separate savings and investing accounts, for example, or allowing each spouse to have a certain amount of "mad money" to spend as they wish while all the other assets are combined in joint accounts.
As you determine which approach could be best for your marriage, you might consider starting an entirely new banking relationship that includes a new checking and savings account. You can look at the new banking relationship as a symbol of your new marriage. You get to maintain your past identity (i.e., your past accounts, in this case) but you are willing to start something entirely new to work together (i.e., this new banking relationship). By starting a new banking relationship, it gives both spouses a sense of ownership as you aren’t selecting the bank where either one of you started initially. This can give you both a sense of pride to make this new banking relationship as successful as your marriage.
#4 Deal with debt
If either you or your spouse will enter the marriage with substantial debt – whether it's credit cards, student or car loans, or even the cost of the wedding itself – it's important to share this with each other before you walk down the aisle.
Waiting until after you're married to tell your spouse that you're carrying thousands (or tens of thousands) of dollars in consumer debt is simply unfair. With all the debt laid out on the table, you can come up with a plan for dealing with it. In fact, paying down the debt as soon as possible could be one of the first financial goals you tackle together. Then agree on a philosophy to approach debt going forward in your marriage together. For example, maybe you'll decide that consumer debt is completely off limits, with the exception of a home mortgage and perhaps car payments. Or maybe you'll agree that using credit cards is OK, but you'll pay off the balance each month to avoid interest charges and revolving debt. The point is that whatever you decide, you agree on it together.
#5 Create a budget
It's important that you and your spouse determine how much money comes in every month and how much goes out, and then devise a plan to ensure that there's more of the former than the latter. The first step in budgeting for most people is what's sometimes called a NOW analysis, in which you distinguish between your Needs, Obligations and Wants.
While many couples are open to creating a budget, the real difficulty is often holding accountable to that budget. It’s much easier to enjoy the spending, but far more difficult to be honest about where the spending is causing a challenge with your budget. When you create your budget, take the time to define how you will hold accountable to it. Will someone be responsible for reporting on it monthly? How will you discuss and resolve items where you have gone over budget? These aren’t always fun topics of discussion, but defining them in advance can save quite a bit of stress and anxiety.
#6 Be realistic
Many people enter marriage with rose-colored glasses, perhaps envisioning the financial stability and possessions of their parents and those they enjoyed growing up. What they don't necessarily understand is the years of hard work, planning and sacrifice their parents made to achieve that stability.
So don't expect to possess all the trappings of success right out of the gate – the big house in the suburbs, two fancy cars or lots of grown-up "toys." You may need to plan on renting a small apartment for the first couple of years until you can save up for a down payment on a home, or driving a "beater" a few years longer if it still gets you from point A to point B.
To have success with the aspect of “being realistic,” make sure to have a discussion together on expectations. If one spouse feels an apartment is great, but another wants a home and is too afraid to say something, it can lead to feelings of resentment. Create open lines of communication to ensure that you have a shared vision that enables you both to be happy.
#7 Get outside help
Finally, remember that you're not alone in this process of learning how to manage your money together. There are numerous resources available to help you, from countless books, DVDs and seminars to your clergy (many churches offer premarital counseling that focuses on finances) and professional financial planners.
When you would like to have a fresh start together, we invite you to find out how you can open a new checking or savings account. Find the branch nearest you today.
Common questions about marriage and finances
How do I talk to my spouse about finances?
Answer: Often the hardest part is simply starting the conversation. There are many ways to approach the discussion of finances, and when you want to have success with the conversation, you will want to embrace a few key fundamentals. To allow a conversation that focuses on facts vs. emotions, consider having all of the finances prepared in advance, whether that is in the form of a spreadsheet, bank statements or even a report from your financial planner. Having a foundation of facts can help alleviate the judgmental aspect of the discussion. In addition to your prepared reports, it is most important to keep an open mind to allow a free-flowing conversation. Financial discussions aren’t “one and done.” And when you realize this, you can make sure that each conversation helps achieve greater understanding to help you achieve your common financial goals.
How do I deal with a spouse who has much larger debts than I do?
Answer: Debt is one aspect that can hold a couple back from achieving their financial goals. Whether that debt is credit card debt or student loan debt really doesn’t matter because in the end it is all debt that needs to be paid off. To avoid the debt becoming a point of contention, consider putting a plan in place that allows you both to see it paid off in a timely manner. This could mean rearranging the family budget to pay it down sooner to allow you both to get to your most wanted goals.
