Guidelines for successfully joining your financial lives
Budgeting for Newly Married Couples
by Gary Foreman
Money Mistakes of a Young Couple
Insurance Tips for Newly Married Couples
Money Questions for When You're Engaged
Dear Dollar Stretcher,
I'm getting married soon and my SO wants me to handle the finances. I'm fine with that, as we agree philosophically on money issues and we're both on the frugal side, but the *actuality* of co-mingling funds feels a bit intimidating to me. Currently, we each have our own checking and savings and IRA's and pension funds. I guess I'm looking at streamlining the checking and savings into joint accounts. I am thinking about putting us both on an monthly "allowance" for spending money (eating out, gas, toiletries, minor little things) while major expenses would come from the joint accounts.
I need tips on setting up this system, and maybe ideas as to how to co-mingle our incomes while respecting our individual autonomy? I'm nervous about this. How do you handle this? Thank you!
Congratulations! You've already increased your chances for a successful marriage just by talking with your intended about money. Numerous studies have cited money differences as a major cause for divorce. Money has an interesting effect on a marriage. It can lead to some serious problems. But, if a couple talks out the issues and works together, money can actually help a marriage grow stronger by blending the two singles into one married whole.
You see, each of us has a 'money personality'. It begins to form when we're children. We watch our parents handle adversity or plenty. We develop habits of how we handle our allowance or earnings from part time jobs. By the time we're ready for marriage our patterns are pretty well set.
Now we meet the mate of our dreams! We talk about love, careers, children and trips we'd like to take. We even get a feel for whether our Significant Other is a saver or a spendthrift. But, we probably don't talk about how much we spend on groceries.
The result is a split financial personality. One of you researches a $50 purchase for weeks. The other will make the same purchase in a New York minute. It's not a matter of right and wrong. It's that you don't even understand how the other person thinks. It's no wonder that married couples fight over money.
Then there's the actual bookkeeping part of the job. She not only balances her checkbook monthly, each check has a category to use to help make budgeting easier. He hasn't balanced his checkbook since before football season. "Haven't bounced any checks yet. So what's the big deal?"
Now that we've outlined the problem, let's look at the solution. If you've been married for a few years, don't despair. With the help of your spouse you can apply these suggestions and resolve many of your financial issues, too!
The first step is the easiest. Begin by talking to your partner about their financial history. This can be fun. Ask them about their most extravagant purchase. Find out about their most disappointing birthday gift. Do they remember any funny (or sad) stories about their parents and money? Was there a time in life that your mate felt rich? Or poor? Ask them how it happened and how they felt about it.
What you're doing is getting to know them better. Future decisions and discussions will be more understandable if you spend some time now. Make it a date night. This isn't a bad topic for a moonlit walk or even a nice restaurant.
Next, you'll need to make some decisions. Rosalie mentioned a few. How will you split incomes? Expenses? Will you maintain joint or individual checking accounts. What's a major purchase that should be discussed with your partner? What's minor? What about investment decisions? Who will pay the bills and balance the checkbook? How often will you discuss your family budget?
For most of these questions there is no right or wrong answer. You just need to find an answer that will work for your family. You may find that you don't agree on one answer for a specific question. Sam might think a major purchase is $1,000. Sue thinks $250 is big. What's the best answer? In the beginning you'll do better if you discuss things more often. If you're married to a Sue, go ahead and discuss that $250 purchase with her. It's better to discuss too many things at first rather than fight later. As your marriage matures you'll change those boundaries anyway.
Home Budget Spreadsheet – The Simple Way to Budget
There is one area that I feel does have a 'right' answer. That's in co-mingling your funds. I know that I'll ruffle some feathers here, but I don't see how you can create one married family by keeping all your finances separate. When a couple says 'You pay half the groceries and I'll pay half' I wonder how long it will be before they rarely eat dinner together.
That's not to say that every cent must be owned or controlled jointly. As Rosalie points out, each person should have some money to spend however they want. If your budget's tight, you probably can't afford to have too much 'fun money'. But as you get your finances under control and prosper you can increase the amount.
For some families routine expenses are included in the individual allowance. One person may be responsible for groceries or auto maintenance. If they manage to save money by smart shopping they can use the extra for whatever they want. Again, it's an individual choice. Talk it over and decide what's right for you.
You'll also need to discuss investment philosophies. Chances are one of you will take more interest than the other in investments. Let that person do the research and tracking. But I'd advise that all investment choices (including IRA's) be made jointly.
Don't forget to set some financial goals. When do you plan to buy a house? Are there children in your future? How much money will you want in savings before they arrive? Pick goals for different time frames. There should be some that you want accomplished in the next six months. Some for one or two years from now. And a few for five or even ten years out.
One of the early goals will be to create a family budget. There are a bunch of good guides available. Go to the library and choose one. Modify it to suit your needs. What you want is something that will help you tell if your finances are on course. And if you're off course, how to correct the situation.
Finally, don't let money be a source of fear and frustration. Use money to get to know your spouse better. Use it to set and achieve goals together. With reasonable effort you can use your family finances to help build a marriage that will last a lifetime.
Reviewed August 2017
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter. Gary is also available for audio, video or print interviews. For more info see his media page.
Take the Next Step:
- Know how to have a successful money talk with your new spouse.
- Get off to a smart financial start together by discussing these money topics before or soon after you tie the knot.
- Join those who 'live better...for less' - Subscribe to The Dollar Stretcher newsletter, a weekly look at how to stretch both your day and your dollar! Subscribers get a copy of our ebook Little Luxuries: 130 Ways to Live Better...For Less for FREE!