4 Money Management Tips for Newlyweds
4 Money Management Tips for Newlyweds
If you think getting married is a tremendous emotional step, you would be correct. But, it’s also a major financial one too. Each one has their own individual goals and ways to handle money. We offer these money management tips in an attempt to get both spouses on the same page and frame of mind.
It’s best to discuss money management before marriage and decide on the method of handling the finances. Both long term and short term goals should be discussed. A lot of stress can be avoided later in marriage if these financial issues are taken care of early by laying everything on the table.
Tip No. 1: Both need to agree on long term and short term goals
Each spouse should know the other’s income, listing of all debts, credit score, and spending habits. It also helps to know the financial backgrounds and any possible problems.
All of these goals are very important, especially if you plan to buy a home together. If one has bad credit or high debt, it could affect your ability to qualify for a mortgage. Creating a debt repayment plan or a credit repair could help.
Of all the money management tips, we consider this one most important. Never withhold financial information from each other. Always discuss financial issues before they become a problem. Talk about any other priorities as well such as vacation spending and saving for retirement.
Tip No. 2: Discuss how bank accounts will be managed
Some couples merge their bank accounts while others maintain separate accounts. There’s no hard and fast rule here. Whatever works best for a couple is fine as long as all bills get paid when they are due.
Sometimes using a joint account to pay for expenses that you both will contribute to works best. It’s simple to make a listing of all of those expenses and then either split it in half or perhaps share proportionally based on each income.
Tip No. 3: Beneficiaries should be updated
After you get married, there are some paperwork details that must be taken care of. Life insurance policies need to be changed as well as retirement and deposit accounts.
There are different rules for beneficiaries of retirement accounts. In a 401(k) account, federal law says that the spouse will receive it unless a waiver is signed to relinquish it. Also, if you live in a community property state, the spouse could receive one half.
More important money management tips involve changing the W-4 forms at work. After you’re married, you will either file a joint return or a married separate return. Both spouses need to discuss this matter as well and decide how they will file.
Normally, a married filing joint return will result in less tax. However there are situations where filing a married separate return might be advisable. For example, if one spouse has unpaid taxes or some other financial problem, a separate return is better.
Tip No. 4: A prenuptial or postnuptial agreement should be considered
We hear a lot about a prenup and are familiar with them. However, a postnup is not all that familiar. It can be executed at some point after marriage and states how assets will be divided if divorce or death occurs. This makes sure that the state law doesn’t change how you want these matters handled.
There are situations where some type of marital agreement is necessary. If you live in a community property state, a marital agreement is important. Or perhaps there are children from a previous marriage, or maybe a large inheritance is forthcoming.
There may also be a large disparity in income between the spouses where certain assets may have to be kept separate. In any event, these and perhaps more money management tips need to be discussed in detail and agreed upon.
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My fiance and I are considering using a joint account for household spendings while maintaining our individual accounts. This seems like the most reasonable option from my perspective. And thankfully my fiance agrees with me on that one. Many of our friends are very set on keeping their financial independence even after getting married. But to me it kind of defeats the whole idea of getting married. You don’t have to completely merge your finances, but using a joint account for bills and stuff like that shouldn’t be a problem.
Thanks for your comment Haly. I too like the idea of a joint account for household spendings. Keeping a separate account for personal type spending works well for most couples.
This is a great article that I will be passing along to my sister who just got married last month. Great advice for them about updating beneficiaries and also creating short and long term goals. This was something my husband I took awhile to figure out.
Thanks for your comment and kind words Tina. Glad to hear someone appreciates our advice.
Are many of these things subjects that should be talked about before the marriage? I feel like a lot of disagreements on these could cause a lot of divorces. Is there a way you would suggest going about these delicate subjects?
Thanks for your question Nadia. One of the leading causes of divorce is money issues. I’ve been preaching this for many years, and that is that any couple contemplating marriage, needs to sit down together before marriage and put every financial issue on the table. Nothing should be withheld. It can be very difficult for some, especially if one is a spender and the other is a saver. There is no “one size fits all” answer on how to suggest it, but it must be done.