Cashology by FNBO
How to Manage Finances in a Marriage
What makes a happy marriage? Love, commitment, trust, communication? We could do a lot of podcasts trying to answer that question. But researchers find that one of the keys is being on the same page about money, about how to manage money and family finances. And it’s something that a lot of newlyweds don’t consider before tying the knot. So what are some good tips for newlyweds – or for that matter any married couple – when it comes to managing their finances? That’s the question for today.
What’s so hard about managing finances in a marriage? Why is it such a challenge?
- You’re looking at money from a combined position now.
- Combined income, spending habits, debt, credit scores, goals,
- First thing you really need to do is get a picture of your combined financial position.
- You really need to get everything out on the table.
- Incomes, savings, retirement savings, debt, credit scores, insurance policies.
- Get all of your assets and liabilities listed out and see where you stand.
- This comes first. And it isn’t easy. We’re still very private about money, even with our spouses.
- In business, they say information is power. And sharing information is sharing power. That’s kind of true in a marriage, too.
- It takes a lot of trust.
Let’s say they get through this first step, they share everything, what comes next?
- Talk about priorities.
- And make sure you agree on priorities.
- Whether it’s paying down debt, saving for a home, buying a new car, planning for children.
- Everything about marriage has a financial side to it.
- Eating in or dining out, taking a vacation or going to a concert.
- Talk it out, as much as possible.
- And be specific – for example, when it’s okay to use a credit card to make a purchase.
- You don’t have to agree on everything 100% but it helps to have a common understanding of how you’re going to manage money.
- Let’s say you agree you’re going to save for a home and pay down student loans. Those are your priorities. And of course to have an emergency savings fund, a savings account that buffers you against the unexpected.
- Then it’s time to set specific savings and payment goals.
How detailed do we need to get on these goals?
- Very detailed.
- Make a budget that identifies all your income sources, savings goals and spending limits.
- Know how much you’re going to set aside with each paycheck saving for a down payment on a house or paying of a student loan.
- Be detailed.
- This can be challenging but making that budget and sticking to it will give you some peace of mind about your finances.
- And it gives you a way to measure how you’re doing each month.
Will this approach work for everyone? And do they have to decide who’s in charge of their money?
- It gives everyone a starting point.
- But another important aspect of managing finances in a marriage is defining responsibilities.
- Who does what?
- Who pays the bills, who pays for miscellaneous expenses, who manages the accounts.
- And will there be joint accounts or individual accounts?
- Don’t leave these things for time to decide. Talk about them. You can always change roles and responsibilities later if you want.
That’s a reassuring idea, I think, that it’s not a one-time discussion or decision. It’s ongoing and something that can always be discussed and changed around.
- Couples should always be talking about their finances and adjusting their goals and budget as needed.
- Incomes change, goals change. Keep the conversation current. Keep the communication going.
- And track your progress. Whether it’s once a month or once every three months or so. Sit down together and take a look at how you’re doing.
Communication is the key.
- FNBO: https://www.fnbo.com/insights/personal-finance/how-to-manage-finances-in-a-marriage/index.html
- Money Crashers: https://www.moneycrashers.com/money-management-newly-married-couples/
- Simple: https://www.simple.com/blog/how-to-manage-money-as-a-couple