Plan before you spend
Let’s work together with a budget… Now that the two of you are one, you can take some of the emotion out of money and plan for the future. Before you start a budget, Experian says you need to put all of your cards on the table and discuss the future you both want. As we explained earlier, both parties should have their financial history ready and then be open about it. Marriage and finances need transparency.
Some actions you might want to take include:
- Setting up a budget. This should include typical household expenses such as rent or mortgage payments, car loans, student loans, food and entertainment and much more.
- Using easy tools for budgeting. Using tools such as Mint, Tiller, or YNAB make budgeting and household finances much easier. Your bank or credit union may also provide budget and money management tools that are built into your accounts for fee.
- Deciding on investments. Investing involves risk tolerance, and, you guessed it, both parties are likely to have different levels of risk tolerance.
Who is paying for what… Couples must determine how common bills will be paid. Will they be paid directly from a shared bank account or from individual accounts? About 74% of couples come into the relationship with earnings that aren’t the same, according to Business Insider. This imbalance can also cause issues including resentment in the relationship. So, it may be better to have that shared account, perhaps in addition to individual spending accounts.
If couples decide not to have a joint account, and bills are paid from individual accounts, should the bills be split 50/50 or should each partner’s income be a deciding factor?
Obviously, this depends upon what is best for the couple. Couples who earn roughly the same salary might go 50/50 on all shared expenses. Couples who have a large difference in salaries might agree to split up shared expenses based on how much each one earns. If you’re the type of couple who does not want a joint account, apps such as Splitwise can make things easier. Finances in marriage should be discussed before the wedding.
Action item: Use the worksheets below to write down expenses and income, so you can understand where income is going. Plan ahead with budgeting. Don’t forget to include long term goals. Even if some bills are paid individually, they should be included in the budget.