Money and Marriage
Money and marriage are two things most people want in life.
And while money isn’t a romantic topic, it’s something that married couples need to address. When you’re on the same financial page, it can mean marital bliss. However, when your finances are out of synch, it could mean arguments and plenty of sleepless nights on the couch.
If you have trouble talking about personal finance with your significant other, now is the time to start managing your money as a couple. Money problems and disagreements are a leading cause of divorce.
You have the power to make you money and marriage positive things to talk about openly. In this article, we’ll look at coming up with common financial goals, preparing a budget together, and figuring out how to handle your bank accounts, among other things.
Coming up with common financial goals
Before you got married, you might have considered yourself a personal financial planner. You did your best to meet your money goals. But once you’re married, that mindset needs to change. You’re part of a team now. That means you need to make joint financial decisions. If your financial goals don’t line up, you could find yourself at odds on how to save or spend your money. Nip this in the bud by having an open and honest discussion about where you see yourselves as a couple in the short term and long term. Are you saving for a down payment? Are you paying off debt? Should you save for your child’s education? Come up with common financial goals and work together to achieve them.
Preparing a budget together
Once you and your partner talk about money and agree on some common goals, you can focus on coming up with financial plans to get there. At the heart of a financial plan is a well thought out budget. A budget will help you accomplish your goals and avoid big financial trouble. Start by reviewing your partner and your spending habits and see what you can adjust. You may not be on the same page at the start, but by having a frank discussion, you can eventually reach a mutual agreement. Once you prepare a budget, be sure to stick to it.
Are you having difficulty getting on the same financial page? That’s when a financial advisor can come in handy. A financial advisor is an independent third party who will provide with you an unbiased opinion on your finances. This professional can help you with everything from budgeting to debt management. By having a fresh set of eyes look at your family’s finances, it can enable you to grow closer together as a married couple.
Be realistic with your budget
When creating your budget, it’s essential to be practical. For example, it’s probably not a wise decision to add another car payment if it means putting you further into debt. It’s best to avoid making any major purchases that you can’t afford to repay. Often, problems arise when you and your partner have different expectations when it comes to money going into a marriage. You can avoid this by coming up with a realistic budget together.
Paying your bills on time
As a household, you’ll have bills to pay. Come up with a system that works for both of you pay your bills on time. Perhaps it’s a shoebox or Internet banking. Whatever the system, it’s crucial that you have one in place that keeps you paying your bills on time.
Remember that debts that carry both your names affect both of your credit ratings. If you have a car loan, line of credit, or mortgage together, missing a payment can affect your partner’s credit score and vice versa. Stay on top of everything to avoid damaging both of your credit scores.
Allocate some spending money
Achieving financial goals can be stressful enough for married couples without adding the extra stress of fighting over your finances. While it’s relatively common for spouses to maintain some level of financial independence, having secret credit cards, bank accounts, and purchases don’t indicate independence. One-third of millennials would consider ending a relationship because of a financial secret, according to TD Bank’s Fifth Annual Love and Money survey.
To avoid disagreements here, set a part of your budget where your partner and you both get some “free” spending money. With this spending money, you’re free to use it as you see fit. By doing this, you’re less likely to want to hide money from your partner.
If two households are joining to become one, you should theoretically be able to save one person’s entire salary. Although you probably won’t cut your household expenses in half when you get married, there’s no better time to be frugal than in your first year together as a couple. Try to avoid debt at all costs. Instead, squirrel away as much you can towards your joint savings goals like the down payment for a home.
Don’t commit financial infidelity on your spouse
When you recited your marriage vows, you promised to be open and honest with your partner. This includes your finances. Take some time to sit down with your partner and talk about money. Figure out where you stand right now. Determine what your net worth is right now as a married couple. Consider all your combined assets and debts. Talk about your credit history.
Having a clear picture of your finances will provide you with a solid foundation to build your financial future together. By keeping secrets and committing financial infidelity, it will only lead to problems later on.
Figuring out where you stand
If you want to do money and marriage right, they need to be your primary focus, every day. Handling money together and discussing the surrounding issues can strengthen your bond. Seek financial advice if you can’t find a good starting place together. Do you know what the most important thing is when talking about your financial situation? Know where you stand in the first place.
Start by determining how much:
- You both make
- You each spend
- You’re both saving
Once you figure this out, you may be pleasantly surprised to learn that you’re in better financial shape than you first thought. Or your financial situation may be worse than you thought. Either way, it provides an eye-opening experience.
Figuring out how to handle your bank accounts
Many financial gurus suggest opening a joint chequing account for your daily spending and household bills. With a joint bank account, both paycheques can go to one location where all shared costs come out of this account. That way, your partner and you know where you stand financially as a couple. Some banks charge you a monthly fee unless you keep your bank account balance above a certain dollar threshold. However, by combining income with your partner, you can avoid those fees.
If keeping separate accounts is essential, your partner and you could still keep separate savings accounts. By having different accounts, this will give you some freedom when you want to surprise your partner with a Valentine’s Day gift. Besides the convenience of having a joint bank account, you’ll save yourself a lot of headaches if your spouse suddenly passes away. Your bank could freeze the joint account, making it difficult for you to pay your bills.
Avoid the debt blame game
What types of debt do your partner and you have? Do you have student loans? Do you have credit card debt? Try to avoid blaming one another for any debt that you’ve incurred. Two-thirds of Canadian couples enter marriage or common-law relationship in debt, according to a CIBC survey.
Instead, focus on the positives. Look at the debt as if it belongs to both of you. See it as a challenge and a financial hurdle you must overcome as a couple. Add to this that once you’re married, your partner is usually responsible for paying your debt. This is another good reason to adopt this approach.
Once you’ve figured out your combined debts, next focus on which ones to prioritize paying off. You might decide to focus on paying off the smallest debt, or you might decide to pay off the highest interest-bearing debt. Whatever you choose, it’s vital to come up with a plan and stick to it. That way that extra money that you have, you can put towards your highest priority debt, while making the minimum payments on the others to keep your credit in good standing.
Are you struggling to tackle your debts together as a couple? Don’t struggle alone in silence. That’s when you might consider an alternative debt solution, such as debt consolidation, to make repayment easier. By booking a free consultation with a licensed insolvency trustee, he or she can help point you in the right direction in terms of your finances. Your money and marriage are too important to avoid seeking help.
Money and Marriage: Reward yourself as a couple
Just because “budget” and “boring” both start with the letter “B,” it doesn’t mean your budget has to be boring. It’s important to have some fun as a married couple. Although money may be tight when you first get married, try your best to fit in somewhere in your budget the opportunity to have some fun and reward yourself.
Think about something you both enjoy as a couple, such as a special date night, weekend getaway or a beautiful night in with a bottle of wine. By figuring out what your reward will be, it will motivate you that much more to reach your goals as a couple.