Whether you’re moving in together for the first time or you’ve been living as a couple already, “married life” can come with a different way of looking at things – especially around decisions to share finances and set shared financial goals.
It’s never too late (or too early) to talk about how to manage finances as a couple. They aren’t always the most romantic conversations, but it’s important that you and your partner work on understanding each other’s financial decisions.
We can help you set up your finances with your short and long-term goals in mind, taking some of the hassle out of running a household, as well as helping you budget and save for bigger things.
Some of those big-ticket items could include a delayed honeymoon, further travel together, saving for a home deposit, getting a mortgage, or expanding your family.
In a marriage, communication is key, and finance is no exception. There are several ways to manage finances as a couple, so let’s have a look at some key areas.
One of the big decisions to make is around how to run your household and manage personal finances, for example, how you might split or jointly pay for bills.
It is not necessarily a given that young married couples merge their individual bank accounts into a joint account. Finances can become complicated by previous marriages, unequal assets or income, previous debt and other issues, such as a sense of financial autonomy and independence.
It’s important to start by talking openly and honestly about your financial situation. Lay all the cards on the table about your current debts, arrears, errors, habits and attitudes to finance. It might be a good time to make some common goals and talk about your approach to savings.
Work out how you’ll split the bills before they start coming in. Try our comprehensive budget planner to start tracking what your and your partner’s money is doing. A budget helps you get all your outgoings – the bills you’re paying and the spending you’re doing - in one pile and all your incomings - the money you have coming in – in another pile. Once you know what you’re spending and saving you can decide how household expenses including bills can be paid. Perhaps, you might decide to split the bills down the middle or decide to pay them proportionally if, for example, one of you earns more than the other.
The option of having a shared bank account, while retaining your independent accounts for personal spending, is another strategy.
You may want to merge everything into one account and manage your money together in one spot. Choosing to merge your accounts reduces how many accounts you have which can cut account-keeping fees.
A joint bank account can streamline your household running costs by allowing you to have one area into which you can both put an agreed amount. This account is then used to pay bills and cover household expenditure which could include buying the groceries.
A joint bank account is a bank account with two account holders. Joint accounts are often used by couples to combine some or all their finances to help manage household expenses, including mortgages, and to save together.
Whatever you decide, it’s important to talk about how you can retain your financial independence while working together.
Adding an additional cardholder to your credit card is a way to share the benefits and convenience of your credit card with someone else, without having to open a new credit card account.
A shared credit card allows you both to share the one credit card account and be able to use your card in different places at the same time.
You can use the card as a method of paying bills and meet the repayments at the end of the month, together.
It’s important to remember that the credit card debt belongs to the primary card holder.
An important step is to decide on your goals together and think how you can meet them financially. You might decide to save for a home deposit or plan for having a family.
A household budget will help show you where you are spending and where you could save. It can provide a clear picture of your income and outgoings and what you can put away toward shared savings goals. You might like to use the Davidson’s Institute handy budget planner to get you started.
For many newly-weds (and veterans too), money can be an area that raises concerns. If you need some prompts to get the conversation started, here are 10 questions to consider. (You might already know some of these, so feel free to only choose those that are relevant.)
1) Do you have debt? How do you feel about debt?
2) How many accounts do you have? How do you use them?
3) If you had to make a large purchase, how would you pay for it?
4) What percentage of income should we use for savings and investments?
5) How much do we need in an emergency fund?
6) What is yours, mine and ours?
7) Do we combine our finances or keep them separate? Why?
8) Who will be responsible for paying bills?
9) What future are we going to build together (e.g. kids, house, vacations) and how will we pay for it?
10) Do you think we’re on track to achieve our financial goals?
These questions are just intended to get the ball rolling. You’re going to stumble onto topics that you need to discuss, so don’t think you need to answer every question one-by-one. Find out what you have in common and how your views on money differ, then come to compromises or agreements that work for you both.
If you need some more information about how you might be able to achieve your financial goals, get in touch with us or drop in to your local branch.
This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice.