Marriage and Money - Yours, Mine and Ours
If you are newly married, or planning on getting married soon, be sure to allocate some time to considering some of the financial aspects of marriage. Marriage will change how you handle your finances and it can also be the source of anguish in a marriage. Here are some things you may want to consider:
Some discussions before your wedding day
After you are married, you and your spouse will be financially responsible for each other and to each other. This responsibility includes legal things like being liable for joint debts and filing a joint income tax return; and physical things like putting food on the table and paying the rent.
But, it also has an emotional aspect. You owe each other openness and honesty about discussing your finances. The chances are that you and your spouse bring different financial backgrounds to your marriage. One of your families may have been more affluent, one of you may be more inclined to use credit cards or one of you have better financial organizational skills. One may be very interested in financial matters and the other may not care as long as there is money in the bank to pay the bills.
Over time, the financial tendencies that you bring to your marriage will probably be blended into a financial lifestyle that both of you are comfortable with. To help that blending process, consider spending some time, perhaps an evening alone, where you discuss your finances and perhaps even agree on some financial policies.
Common problems to avoid
- Are you going to have individual checking accounts on a joint one?
- How much of each of your incomes is going to be used for normal household expenses?
- Who is going to be responsible for actually writing the checks for monthly bills?
- How are you going to approach things like how often to buy cars, how are you going to use credit cards, how expensive of vacations are you going to take or how much risk do you want with your investments?
Many couples have some disagreements over how much money each person is spending, either on themselves or overall. It may take some time to find a comfort level of spending. The key is to discuss your spending before it becomes a big issue.
Another common problem is where one spouse ends up completely uninformed about their financial status. Even if one of you is more comfortable handling the finances, be sure to keep the other one informed. Not knowing how much money is in the checking account can lead to bounced checks and potentially a feeling of being taken advantage of.
As you grow as a married couple, be sure to have discussions about long term financial goals. Knowing how each other feels about saving for retirement, taking risks with your investments or how much current financial sacrifice you are willing to make saving for a child's college education is important. Discussing these things may not only avoid a problem, but may actually bring you closer together.
Some practical things to address
When you marry you need to consider how your beneficiary designations are set up on your retirement plan, IRAs and life insurance policies. You will probably want to designate your new spouse as beneficiary. You also need to notify the Social Security Administration of your new status.
If you are changing your name, you will also need to notify institutions like your bank or credit union, employer, Department of Motor Vehicles and companies where you have accounts.
Getting married is a big step in your personal life. It is also a big financial step in your financial life. Get to know your partner financially before you are married, discuss your finances often and you may find that these financial discussions will bring you even closer together as you dream of your future.