As you and your spouse bring your lives together, your finances will play a key role in how you plan your shared future. Starting to discuss finances early in a marriage helps form good habits of communication and facilitates shared budgeting for the future. While you may have a grasp on how to manage your finances alone, knowing how to manage finances in a marriage can help eliminate conflicts and set both of you up for a more stress-free life together.
To help you start off on the right foot, here are some money and marriage tips for newlyweds that can help you successfully manage your money and prepare for the future.
Before the wedding, your planning and saving was dedicated to the big day. Now that you’re comfortably settled into married life, you may be wondering, “How do married couples handle finances?”
The first step to managing finances in a marriage is to be honest with each other about your financial situations. This means being transparent about your income, debt, spending habits, and financial goals. Make it part of your routine to sit down together and discuss your shared finances. Talk about the state of your joint assets and any unforeseen expenses (or windfalls) that have come up recently. Make a point of doing this regularly, so both of you are fully informed and can avoid any surprises down the road.
Once you understand each other's finances, set financial goals (and limits) together. This could include short-term goals like saving for a new living room set or long-term goals like buying a house or planning for retirement. Setting financial goals together will help you work toward a common objective and keep you both motivated to achieve those goals.
It’s important to know where your money’s coming from and where it’s going every month, especially if you’re new to working with a combined income. Creating a budget can help and is a critical part of managing finances in a marriage. It not only helps you avoid going into debt, but if you are in debt, it can be a great help in getting out of it.
Make a list of your combined monthly income and expenses, including bills, groceries, entertainment, student loans, and any other debt payments. A budget will help you track your income and expenses, identify areas where you can cut back, and plan for future expenses. Just don’t forget to designate a portion of your combined income toward savings and emergency funds. In case one (or both of you) is ever laid off or is faced with unforeseen medical expenses, experts suggest having at least three to six months’ worth of living expenses set aside.1
Once you set your budget, it’s important to stick to it. However, it isn’t set in stone. Review your budget regularly and adjust it as needed.
While joint bank accounts are common in marriages, it's also important to maintain separate bank accounts. This is called the “yours, mine, ours” approach, in which you each have some autonomy over an agreed-upon portion. Buying your spouse a birthday gift with money from your joint account would give away the surprise. Keeping an account for yourself allows you a bit of financial freedom and helps organize your spending.
You don’t need to have a conversation before one of you spends $20 on lunch. But $500? Or $1,000? It would probably be best to discuss that first. Figure out what the “let’s talk” amount is for you as a couple, and agree that neither of you will ever be left out if the other makes a big purchase.
Learn to save money as a married couple by setting goals with your spouse to meet financial milestones, like repaying student loans and saving for retirement.
When you apply for a loan as a married couple, banks assess both of your credit scores. If one person is carrying significant debt, your application could be denied. Be aware of both your credit scores, and think through how you can look your best on an application.
It’s easy to dismiss life insurance as something you won’t need until you’re older, but buying life insurance when you’re young may end up costing you less in the long run. In the unlikely event that one of you passes, the other will need to continue without the support system you’ve established together. So, don’t wait; the average annual premium of a life insurance policy increases dramatically as you get older.
Real estate is an asset (and an investment goal) that many married couples work toward. Speak to a real estate expert in your area if buying a home is an important milestone for you and your spouse. Be realistic about when and what you can buy. If you live in an expensive housing market, buying a home may not be realistic for a while. That’s OK. If renting makes the most sense on a cost level, rent, but contribute to an investment fund that builds equity over time, just as mortgage payments would.
Having children may not be part of your plan, but if it is, prioritize your future savings. You can get education loans, if necessary, but you and your spouse won’t be able to get retirement loans. Start contributing to your retirement fund as early as possible. A common guideline is to put about 15% of your income into retirement savings. Online calculators can help you determine how much you’ll need to live comfortably after you stop working. Learn all you can about 401(k) and IRA options, and if your employer matches your contributions make sure you take advantage.
If you plan to have children, you should start preparing for college as early as possible. Look into your state’s 529 college savings plan to see if it offers additional tax benefits, or investigate alternative investment vehicles that charge low fees. The earlier you start saving, even just a little bit at a time, the less financial strain you'll face when the moment arrives.
If a close friend or a family member approaches you for a personal loan, how will you respond? You and your partner should agree on a policy, so neither of you ever feel that a friend or a family member is being treated unfairly when money is involved.
Ideally, this should be done early in your marriage, but it becomes more important as time goes on. By the time you’re a decade into marriage, you should have a healthcare power of attorney granted to someone, and your will should be well organized and updated regularly. Less than half of Americans have a will in place2, but you need to make it a priority to organize your assets and sign a will for the ease and benefit of your loved ones.
If you are struggling with managing your finances or have significant debt, seek professional help. A financial professional can help you develop a financial strategy and create a budget. Some can even help manage your investments. Perhaps most importantly, a financial professional can provide you with valuable guidance on how to manage your finances and work toward achieving your financial goals.
Asking your parents for marriage and financial advice can help as well, but your parents’ money approach doesn’t have to be your money approach. Maybe only one of your parents handled the family finances. Maybe your parents seldom discussed money. You and your spouse should approach your shared finances your own way and discover what works best for you.
Remember that managing finances in marriage is a partnership. Working together will not only help you achieve your financial goals, but it will also help strengthen your relationship even further as you build your lives together.
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1Kevin Mercadante and Kate Van Pelt, “Emergency Fund Calculator,” Money Under 30, November 14, 2022. https://www.moneyunder30.com/emergency-fund-calculator
2Rachel Lustbader, “2023 Wills and Estate Planning Study,” Caring.com. https://www.caring.com/caregivers/estate-planning/wills-survey/