When you get married, there’s one area that needs to be discussed which isn’t necessarily romantic but is important, and that’s finances. Many newly married couples don’t even know the financial status of their partner, which can create serious problems.
A poll by the National Foundation for Credit Counseling found 68 percent of engaged couples have a negative perception about discussing money. 45 percent described financial conversations as awkward but necessary. A separate study from Fidelity found that one-third of participants didn’t know their partner’s salary.
Some of the primary things to discuss even before walking down the aisle include types of debt such as credit card debt and student loan debt. It’s also important to talk about budgeting goals and priorities (for both the wedding and after), whether you’ll have a joint bank account or not, and how you plan to save and invest money.
Basics of Joint Bank Accounts
How newlyweds talk about and handle money has changed over the years. Millennials get married later than generations before them, and couples are much more likely to keep their finances separate and avoid joint bank accounts.
Joint bank accounts have two or more people that own it and are used to pool money. Both spouses can contribute, and it does facilitate better savings for shared goals. This also makes it easier to pay shared expenses, such as the mortgage or car payments. One of the biggest perks of a joint bank account for many couples is the fact that it allows them to budget more effectively.
However, some couples may find that they want an individual account as well. Some couples do both. They have a joint account for shared budgeting and expenses, and their own individual accounts that provide them with the freedom to spend how they see fit.
Another option is to have individual checking accounts and a shared savings account. There are many different high-interest savings accounts that will give you a much better return on your savings.
How to Determine a Budget
When you get married, along with discussing finances you should work to create a budget with your partner. Having a budget can make the management of your money and finances a smoother process throughout your marriage.
When you’re creating a budget, start with adding up your shared income. Then, list your expenses and everything you spend in a month even outside of your bills. You can then create a goal for what you’ll do with your extra money if you have any. If you find that your expenses could go beyond your earnings, you can start looking at ways to either reduce expenses or bring in more income each month.
When you’re creating a new budget, provide some wiggle room for both of you. Being too strict can cause frustration and resentment while being too lenient could cause financial troubles.
Easy Ways to Save Money
If you find that as newlyweds you need to cut expenses, there are many routes you can take. A few examples include refinancing student loan debt for lower interest rates and a lower monthly payment or moving credit card debt to a low-interest or no-interest balance transfer card.
It can also be helpful to combine insurance policies with the same company to save, or to cut out unnecessary monthly bills such as cable.
How to Make Extra Spending Money
If you’re budgeting with your new spouse and you’ve cut out unnecessary expenses, you may also start considering ways to earn extra money. Extra money can be used for discretionary spending, or to pad your savings accounts so you can achieve your shared goals more quickly.
There are nearly endless options for earning a side income. For example, you can work as freelance writers, editors, photographers, or whatever you might have skills in.
There are other options such as working as an Amazon delivery driver or driving for Uber or Lyft. Services like Wag! are on-demand pet-walking and sitting services, or you could rent a room in your home on Airbnb or VRBO.
An Open Conversation
Finally, when you’re a newlywed, you want to start your financial journey together in a positive way. It’s valuable to always keep the lines of communication surrounding finances open, and positively discuss it all rather than negatively or while playing the blame game.
When discussing finances, try to avoid finger pointing or judgment. Be honest about your concerns, however. Try to have discussions sooner rather than later as well, so that problems don’t spiral out of control and become more difficult to solve.
Andy Kearns is a Content Analyst for LendEDU and works to produce personal finance content to help educate consumers across the globe. When he’s not writing, you can find Andy cheering on the new and improved Lakers, or somewhere on a beach.