Finance

How to Talk About Money When You are Married

Managing the family money is one of the most important components of married life. The secret is to have a talk and establish ground rules on how to manage your finances. This will set the pace and provide the structure. Here are ways you can manage your money as a couple and ensure that your financial life together is smooth-sailing.

January 10, 2022

How to Talk About Money When You Are Married

While discussing money isn't exactly romantic, it is absolutely vital for any committed relationship!  Whether you’re dating, engaged, married, in a domestic partnership, or pretty sure you’re in it for the long haul, it is crucial you have those regular money talks. 

Your marriage may be the one of the MOST significant investments you will ever make in your life. That being said, a happy, stable home produces happy, stable children and creates the ideal environment for a successful marriage, both of which can serve as the foundation for your financial security in the future.

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How to Talk About Money When You Are Married

Even though talking about money with your partner might be challenging, it's important to plan how you'll handle your finances together to avoid heated conflicts and put your relationship on a good financial path. Agreed? 

Relationship tension is often caused by money problems, but these problems are solvable!  Determining your joint financial goals is therefore one of the first things you should undertake, ideally very early in your marriage. Ask yourselves: What do you hope to achieve? Are you saving for a second house, your children's college education, or an early retirement?

Here are some tips on how to talk about money when you are married:

Tip #1: Have “Money Talk” Dates

Even though talking about money is an important topic, it doesn't have to be a dreary one. You should set aside time with your spouse to examine your financial goals, such as your budget, savings, and retirement. Try to think of this as a "break" from your everyday routine rather than seeing it as another task to add to your already full calendar. Meet at your favorite coffee shop (because coffee makes everything better) together and talk through your financial short and long term goals.

Be open about what you are doing to ensure that you are both working and helping each other. Walk with your laptop, notes, your favorite coffee order in mind and get to work! Take things slowly and work on developing a realistic budget based on the future you both envision. 

Grab your FREE budget spreadsheet here!

Tip #2: Communicate as Team Members

Instead of "me" and "you," use the terms "we" and "us" when writing the plan. Remember marriage is a partnership. You are on the same team as each other. If you're the saver in a spender/saver relationship, be understanding. Making allegations is unproductive since it just serves to put people on the defensive. Your goal should be to address the root causes of your challenges rather than trying to demonstrate that you are better with money. If you are confident in your ability to save money, impart some of your knowledge and encourage your partner to do the same to make life easier for both of you. Remember, it’s you and your partner against the problem not each other!

Questions to ask:

  • What’s important to us? Do we want to travel, buy a home, launch a business, or start a family? What will that take?
  • What will retirement look like for us?
  • If money was unlimited, what would we do?
  • Do we have a sufficient emergency fund?
  • What can we do to improve our financial literacy together?

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Money Tips for Married Couples

Tip #3: Assign Each Partner a Particular Set of Duties

Each partner should be assigned specific responsibilities. Is one of you better than the other at keeping track of your receipts for tax season or budgeting your expenses? Assign tasks that each partner is most comfortable with, but don't let one partner do everything! Educate each other on how to make your money work for you! By working in tandem, you likely will achieve your goals faster. When you both want the same thing and are both “in the know” on how to get there.

Tip #4 Keep Your Emotions in Check

Discuss any concerns your partner may have if a certain figure is brought up, such as "how much to save or invest each month." Do they want to use that money to pay off debt or school loans, or are there other goals in mind? To have money for travel or something else. 

Listen to what your partner has to say and decide if there is a workable compromise. Or in an instance where your partner goes overboard with their budgetary allocation. Don't assign blame when this happens. Instead, remember we’re all humans that make mistakes. Consider how to prevent it from happening again.  As a starting point for the discussion, discover why your partner overspent, but avoid passing judgment. Only when all parties accept a budget can it be effective. Financial hardships can occasionally be crippling. For instance, one or both of you may have significant debt. These circumstances are prone to emotional intensity. If you and your spouse are both in debt, creating a written game plan is your best bet.

GRAB a copy of our “Money-Wise Marriage Guide” here!

When debt is disregarded, it typically results in worry. In addition, debt frequently results in shame, which heightens anxiety. Building a solid financial future together requires skillful emotional and stress management.

Tip #5:  Don't Forget to Discuss Your “Future You” Money

The most valuable resource you have while investing for retirement is time. Early savings are always advantageous since they give your money more time to earn compound interest. You should talk about your intentions with your spouse, as well as your assets (both present and future) and preferred retirement age.

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If either of you work independently, you should talk about retirement strategies. To give you a boost, encourage your partner to utilize the retirement benefits at their workplace (such as a 401k match). Or if one partner does not work , consider contributing on their behalf for example with a Spousal Roth IRA. 

A spousal IRA is the common name for the IRS rules that permits a spouse who doesn’t work or earn income to fund an individual retirement account. Spousal IRAs have the same annual contribution limits as any other IRA: $6,000 per individual in 2021 and 2022, or $7,000 for people who are age 50 or older. Under the spousal IRA rules, a couple where only one spouse works can contribute up to $12,000 per year, $13,000 if one spouse is 50 or older, or $14,000 if both are 50 or older. Contributions to each account are capped by the individual annual IRA limits.

Talk to an advisor on what sort of plan would best suit both your retirement plans.

But more important than just the dollars and cents, you want to make sure you and your partner are aligned on the vision of your future together. If one person wants to travel and use money towards that while the other wants to buy a fishing boat - you may run into problems! Create and align on a vision of what your retirement will look like, and set the financial goals to get there.

Tip #6 Speak with an Advisor

It is always beneficial to have a professional assess your financial situation for optimal success. Speaking with an advisor would help you gain from business planning, insurance, tax counsel, or investing knowledge. It's also beneficial for couples to have a third party confirm their plan and of course, to settle bets between the two of you if need be.

Should You Have Separate or Joint Accounts? Or both?

Having Separate Accounts

For many couples, especially those who are used to handling their own finances, keeping separate accounts may be a comfortable starting point. Couples that move in together are likely to have at least a little salary differential as well as any debts they may have brought with them. Disparities in income, debt, and potential personality clashes between spenders and savers can all be made clearer with the aid of a separate accounting system.

Separate accounts actually result in more communication regarding who will be in charge of what payments despite the autonomy. While some couples choose to split costs evenly, others might feel more at ease paying in proportion to their income. The simplest approach to keep tabs on spending could be to use a combined credit card or a shared spreadsheet. You will still need to talk about long-term savings and retirement objectives and create a budget for home expenses.

However, having different accounts gives you greater autonomy in how you manage your finances. This money management strategy is the most "fair," and you could be less inclined to dispute over your spouse's spending habits if you and your partner are both satisfied with how you've decided to split the shared bills.

Note: Each person is now free to manage their finances. To ensure that nobody loses sight of your common objectives, it can also be necessary to communicate more. In the end, you want to steer clear of communication problems.

Having a Joint Account

When all of the money goes into and comes out of one account that you both can see, there is less likelihood of experiencing financial "surprises," which is one of the key benefits of having a joint bank account. Because all expenses are deducted from one account, couples who have joint accounts may find it simpler to manage their finances. In addition to making it simpler to balance the checkbook at the end of the month, it also makes it difficult to overlook account activities like withdrawals and payments.

Note: Sharing a bank account can make managing your finances easier, but there are also some possible cons. For instance, some couples might feel as though they are losing their financial independence if they have a joint bank account. Separate accounts allow each partner to maintain their own level of financial independence. In other words, there is no "checking up" from the other partner because transactions are private rather than shared.

Having Both Individual and Joint Accounts

Although having separate and joint accounts might be difficult, for some couples it may be the best choice. The idea behind this strategy is that debt, retirement, and savings are all managed jointly and that all income is paid into a shared account or accounts.

 How it usually works is a predetermined amount is deposited into each person's private checking account each month. Each partner can use this "personal money" to pay for any demands or requirements they have that are not shared costs, as well as to buy gifts for their spouse. To prevent disputes, the amount that goes into the personal accounts each month must be discussed and agreed upon. The plus here is you do not have to worry about salary differences while paying your expenses, and joint accounts make tracking finances easier. While each of you are free to make purchases without consulting your partner, you also collaborate to work toward a shared retirement plan.

Note: Even though this strategy is easy to monitor, it requires setting up and maintaining many bank accounts. It could seem like an allowance to some people to have money transferred into their personal accounts each month.

Setting Financial Goals as a Couple

Again, whether you opt to open a joint bank account or have separate bank accounts, you and your spouse will discover that it's important to set financial goals together in either case. It's imperative to regularly discuss your financial goals and plans with your partner in order to determine what makes sense. It's also important to review that strategy and alter it as needed. With this strategy, you and your partner may routinely discuss spending and budgeting and eventually achieve long-term financial stability.

Wrapping Up

There is no one way to manage your finances as a new couple, but with a little planning, trust, and communication, you and your partner may avoid financial conflicts later on in your marriage. As you start your joint financial adventure, keep in mind that kindness and communication will go a long way!

If you are interested in connecting with one of our advisors, whether you are recently engaged, newlywed, or have been married for some time, we at Vincere would be happy to speak with you! 

To schedule a FREE 1:1 session, click here.

Cheers!

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