One of the most important and intimidating tasks to consider when getting married is how you’re going to handle money together. Between bills, debt, and joint accounts there is a lot to think about. Kimberly Monaghan helps couples reach their financial goals and below gives you her advice on combining finances after marriage including all the dos and don’ts.
DO Get Real About Combining Finances After Marriage
First, get real about where your finances are at. How much do you and your partner make? How much do you have in savings? Have you started saving for retirement? Do you have any debt?
Next, have an open discussion about how you want your family’s finances to work. Some couples fully combine their finances, some keep their money completely separate, and most do a combination of the two. There are no one-size-fits-all systems. The only way to really know what is going to work for you is to talk about it with your partner…and keep talking about it.
Also, remember that you will each come to the table with different ideas about money. For some people, conversations about money can feel really vulnerable. Come to the conversation with kindness and assume the best from your partner. It will go a long way.
DO Lay it All Out
There are three big topics to cover that will give you a solid idea of where you are at with money.
First, talk about what you learned about money growing up, and what you have you learned since. This will give you a good base to understand where your partner is coming from when you talk about money.
Next, it’s time to get it all on paper (or on a screen). You need to understand what you are both bringing to the table, so write it down.
Show each other any assets you have, like your savings account, any retirement accounts you have, and property you own, and share what debts you have – student loans, credit card debt, mortgages, and auto loans. Then you will both know what you are working with, and what problems you may have to solve together.
Lastly, you need to understand your monthly budget so you know where your money is going and who pays what. Do you share joint bills or do you split them? Is eating out important to you? Will you save for vacations? Are there spots where you can consolidate subscriptions?
Getting a handle on the monthly ins and outs of your money is one of the stickiest conversations a new couple can have because up until now you haven’t had to share (or justify) what you spend with someone else. Your budget fuels your life; once you understand where you are together, you can really put your money to work for you.
DO (or DON’T) Have a Joint Bank Account
Maybe. That’s not a clear-cut answer, but some couples can thrive with separate accounts, and some can’t. Whatever you decide, open communication about what is happening in those accounts can go a long way.
DON’T Keep Your Debt a Secret
First of all, it’s essential to disclose all your debt, so you can have an open discussion about what to do about it.
It is also really important to understand the kind of debt you both have. $50,000 in student loans is different than $50,000 in high-interest credit card debt, and each will have different implications and solutions.
Once all of that is on the table, make a plan together about how to tackle it. Will you do it before the wedding or after? Will you do it together or is it one partner’s responsibility? How will you deal with big purchases if one of you has a lower credit score because of debt?
Debt can be a tough burden to carry, but honesty is the best policy. If you get it out in the open, you can both create a solution you feel good about.
DON’T Do it Alone
A Financial Advisor can facilitate all of the big money conversations and help you get on the same page. Talking about money can feel overwhelming, and on top of that, most people have a million things vying for their attention. Financial planning is often at the bottom of the to-do list. However, your plan is at the top of your Advisor’s list, and they are there to walk with you, answer your questions, and build you an actionable plan to get you and your partner where you want to go.
Also, the plan you have when you are single is not the same plan you will need when you are married and own a home, or when you decide to start a family, or open a business. A Financial Advisor can help you understand how to adjust your plan as you grow, to make sure that your money is working for you and going towards what matters most.
DO Plan for the Unexpected
Couples also need to plan for the hard times. When we are starting out, most of us think that nothing bad will happen to us, but the truth is that we say “in sickness and in health” for a reason. Life is going to throw you curveballs. Having a financial plan means that we can plan for joy, knowing that there is a safety net for the unexpected.
My husband and I just got married in September. To me, “in sickness and in health” is bigger than just being there for him and our family if something happens. It is a commitment to being really present when he needs me, and my financial plan allows me to do that because I have planned for the tough times, too.
If you can build a financial plan that is ready for all the beautiful and heartbreaking and joyful things that life has to offer, then you can do anything. You just have to do it together.
Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company (NM) and its subsidiaries, including Northwestern Mutual Investment Services, LLC (NMIS) (investment brokerage services), a registered investment adviser, broker-dealer, and member of FINRA and SIPC, and Northwestern Mutual Wealth Management Company® (NMWMC) (investment advisory and trust services), a federal savings bank. NM and its subsidiaries are in Milwaukee, WI.
Kimberly H Monaghan is an Insurance Agent of NM. Investment brokerage services provided as a Registered Representative of NMIS. Investment advisory services provided as an Advisor of NMWMC.
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