How Does Money Management Change After Marriage?

You have a lot to look forward to after saying, “I do.” Having someone to share the household bills is just one of the benefits. That said, marriage can mean a significant change to the way you manage your money.

When you combine your finances, you need to communicate and share your wants, needs and goals with one another. Here’s what to expect and what you can do to prevent future conflicts.

1. Communicate Early and Often

You now get to share your life — and your budget — with another person. Hopefully, you opened the lines of communication before you tied the knot. If you procrastinated, don’t hesitate any longer. You need to figure out more than who should pick up the dinner tab. Do you want to buy a home, or do you prefer the convenience of renting? Will you rely primarily on one income, or will you both work? What will you do if something happens to your partner, and you find yourself responsible for all of the daily living expenses? These are discussions you need to hold early and often.

2. Make a Personal Budget

You and your new spouse need to decide how you will split the bills. Some couples have one primary breadwinner, while others share the bills 50-50. Still others choose to proportion bills according to their respective incomes, with the person who makes more paying the lions’ share. Once you create your household budget, use a tracking tool to see how it works in action and identify areas of difficulty. For example, your financial institution might have an online tool that shows you how much you spent across various categories. If you notice that you spend more on food than anticipated, you need to identify other areas you can trim — or tackle your takeout addiction.

3. Decide on Bank Account Structure

You also need to decide whether you want to establish joint banking accounts, keep everything separate or combine the two methods. The benefit of joint accounts includes always having your finger on household finances. Plus, if one spouse passes away, the other has access to the money without going through a will or probate. However, this practice can lead to arguments if one of you is a spendthrift while the other prefers to save. Keeping everything separate allows you to keep a tight rein on your money, but it can cause disagreements when it comes to saving for mutual goals. A middle-of-the-road approach involves keeping some accounts separate — perhaps checking — but maintaining a joint savings account for things like buying a home or planning a vacation.

4. Discuss Your Mutual Goals

To avoid arguments and resentment, it’s vital to touch base with your spouse on your mutual goals frequently. Set a monthly date to sit down and go over your budget, as well as your hopes and dreams for the future. Evaluate how you are doing. For example, if you want to buy a starter home within the year, you’ll need to reduce your debt-to-income ratio and save for a down payment. Why not touch base on the first when you pay your bills, anyway?

5. Work Together on Debt Reduction

If you’re young and just starting, you might have significant debt in the form of student loans. You might also have credit card debt regardless of your age bracket. Make a mutual plan to tackle this load together. Choose the debt with the highest interest rate and double up on those payments if you can. If not, put any extra toward that bill first each month. Once you tackle the highest interest rate debt, move on to the next.

6. Change Beneficiaries on Insurance Policies

If you have a life insurance policy through your employer or independently, you might need to update your beneficiaries. This rule applies particularly to couples who had children before marriage, or who previously wed. As much as you don’t want to picture something happening to you or your spouse, it would add insult to injury to discover their ex receives the death benefit.

7. Update Your Withholding

Finally, once you get married, talk to the HR department at your workplace to update your withholding. If you owed taxes in the past, and you fear a surprise bill, you can always choose to withhold at the higher single rate. However, this method allows the government to keep your money interest-free for a year. You can also use the IRS withholding calculator to determine how much you should withhold from each paycheck.

Marriage Changes Money Management — Be Prepared

When you are a newlywed, you might not want to think about money matters yet. However, having these discussions early and making a financial plan together helps you avoid future arguments.