Marrying Your Finances

Whether you’re just beginning to think about marriage, are recently engaged or just got married, it’s important not to overlook one crucial aspect of your relationship: financial compatibility. Questions like, “How much debt do you have?” “What’s your investing philosophy?” and “How much do you save each month?” can be difficult to ask. But discovering these answers early on in a relationship can prevent stress and arguments after saying, “I do.”

Even the most compatible couple may find that they exhibit vastly different attitudes and experiences with spending and saving habits. Assuming your significant other is financially fit can be a recipe for disaster. For example, some people are naturals at saving, investing, and living on a budget. Others are quick to spend without prior planning and may drain their personal checking accounts every month.

Our Money Skills for Newlyweds guide is designed to guide you through these tough discussions. Before you jump into conversation, keep in mind these general tips:

Share the Responsibility
Don’t put the burden of managing finances on one person. Split up the duties or schedule monthly meetings to review everything together. This spreads out the stress of managing finances and helps ensure both partners fully understand the situation in case of an emergency.  

Keep a Positive Attitude
Go to the table with an open mind and understand that there is more than one right way to manage money. Compromising and finding what works for you as a couple should be the goal. Keep in mind it may take time to adapt to your shared budget, and slip ups may happen, especially early on. Learn from those experiences and regularly communicate about how well you are sticking to the financial plan.

Agree on a Joint Budget
Decide how much of your money will be pooled together. Some couples combine everything into one account. Others maintain individual accounts while contributing a percentage of their income to a joint account used for joint expenses. Remember, there’s no one right or wrong way to manage your money as a couple. Find what works best for you and your partner.
 

Basics of Budgeting

Budgeting is one of the most fundamental money management skills, yet few people do it. Begin by reviewing your combined monthly income and expenses. Then make a plan for saving and be sure to stick to it. Crafting and utilizing a solid, effective budget may help you both better manage finances, pay bills, and stay out of debt.
Be sure to read the Basics of Budgeting section of our website

Basics of Investing

Investing can be a great way to build wealth as long as both of you understand the basics and make informed decisions. Ask each other these questions: “Why are you investing?” “Are your goals short-term or long-term?” “What is your risk tolerance?”

Your reasons for investing and your goals will influence the type of products you invest in. You and your partner may not share the same risk tolerance level, so be prepared to openly discuss and compromise investing styles. Keep in mind not every investment may be right for you, and investing in products that are suitable for your needs should be the top priority. Your investment goals, time frame, and risk tolerance may change over time. Reevaluate on a regular basis and adjust your investment strategy accordingly.

Be sure to read the Investing Basics section of our website.

Buying a Home

Buying a home is one of the biggest investments for a couple. Most lenders require a down payment which may require you both to adjust your budget. Major purchases often require sacrificing in other areas. In general, your total monthly debt (including your mortgage) should not exceed 35% of your income.

Be sure to read the Buying a House section of our website.

Budgeting for a Baby

Begin financial planning for a baby as early as possible. With a life changing event like this, you will likely be spending more than you expect. The hospital bills can be expensive, in addition to many first time purchases. Also consider saving for maternity and paternity leave, as this may be unpaid time off work. There are a lot of expenses that come with a newborn, and it is important to plan for these expenses ahead of time.

Be sure to read the Budgeting for a Baby section of our website.