It’s not shocking to learn that finances are among the top reasons that couples divorce. Whether you have too little of it or you disagree on how to handle it, money can be a stressful topic in a new marriage. Licensed clinical psychologist Seth Meyers warns that, “Financial issues can destroy your relationship if you’re not careful.”
So how can newlyweds ease the pain that finances will bring? Experts say that a little preparation and communication can go a long way. We’ve done our research and found some foundational money tips for newlyweds to incorporate into their timeline.
Start by communicating every angle.
Reflect and share about how your parents handled finances. Did they accumulate a lot of debt? Were they always stressed about paying the bills? Or were they more financially responsible? These details are important because they had a lot to do with shaping how you think about money. Once you’ve established where you came from, discuss where you’re at. What financial habits do you currently have? Do you spend $5 every morning on a latte? Do you have a savings account? Chances are that neither of you are handling your money perfectly, but your new marriage is your chance for a clean slate. This new beginning begs the next question, what are your short and long term goals as a couple? Now is the time to discuss how much of your income you’d like to put towards your savings account, retirement, emergency funds, etc.
A few more questions to discuss: How much of your income will go to paying off debt? How much will go to savings? What kind of emergency fund do you want to have?
Next you’ll want to take a look to see where you’re both at.
Walk your spouse through your current checking, savings, and other accounts to establish your starting point. Figure out the amount of debt you’ve accumulated together and whether it was with credit cards or student loans. Do either of you own real estate? Will you have a mortgage? Be sure to subtract your debts from your assets to see the big picture. The next step will be to go over your credit reports together because these numbers will affect your borrowing ability as a couple.
Now create a budget together.
You can start with a basic spreadsheet that includes your essential costs like housing, utilities, food, etc. Next, list out your discretionary expenses like the gym or entertainment. Any time you’re unsure of your spending habits, take a look at the previous month to get an idea of what to project. Mint is a great tool to organize your finances so that you can see exactly where your money is going.
You’ll also want to discuss what your minimum-discussion-amount is. If your husband spends $50 without talking to you about it, it’s probably not a huge deal, but if he decides to go spend a few hundred on something? You might want to discuss the expenditure in advance. You will also want to decide together what kind of emergency fund you’ll put together (one to three months of essential bills?) and how much you’ll set aside to help family and/or friends who are in need.
Set up your bank accounts.
You have three options on this front: joint accounts, separate accounts, or a combination of the two. According to Bankrate.com, it’s easiest for couples to have at least one joint account that bills are pulled from. There’s no right or wrong way to do it, so make decisions that fit within your financial goals and budget the best. You could also prevent future fights by keeping separate accounts for spending if you have different spend habits and a separate spend budget. People who are marrying later in life or have been through a divorce are more likely to keep everything separate, which is ok too.
Appoint a bill payer.
Which of you will be responsible for making sure the bills get paid every month and watching the budget? A lot of times it is easier for one person to oversee this sort of thing. But remember, even if you decide together who will handle this piece on a regular basis, be sure to schedule a regular meeting to discuss your finances together because both of you should be aware of your current financial condition at all times.
Figure out how you’ll handle your taxes.
Are you going to file together or separately? Now that you’re married, you have a few more options. A lot of times when you file together your tax bracket will change. Luckily an accountant can make tax projections for you to figure out what would work best. Keep in mind, there are things you can do to minimize what you owe, like maximizing your 401(k) contribution. Discuss your options with a tax professional to see what will benefit you the most.