Getting married is a major life event that often comes with a huge celebration. However, once the party has ended and you’re living together, there are a lot of things you need to make decisions about as a newly married couple, including your finances. Since money will play a major part in your relationship, you need to ensure you know the do’s and don’ts for combining your finances.
Do talk about your goals
If you haven’t done so already, the first discussion you should have when it comes to your finances are your goals. For example, one partner may want to retire early while the other may be more interested in taking yearly vacations. Rarely will your money goals line up perfectly with your partner, but that’s okay since you want to come up with a compromise. Once you’ve established what your goals are as a couple, you can start budgeting and using your money to achieve your dreams together.
Don’t hide things
It’s never a good idea to keep secrets in a relationship, especially when it comes to money. If you have any outstanding debt, you’ll want to discuss it with your partner. As a married couple, you should be tackling issues together. The last thing you want is to have your current debt get out of control and then affect the family finances. It’s not just debt that should be an open topic - if your spending is getting out of control or you have issues with gambling, you need to let your partner know as soon as possible, as these problems don’t fix themselves.
Do set up an emergency fund
One of the first things married couples should do is set up an emergency fund. Generally, you’ll want to set aside three to six months of living expenses that are easily accessible. This fund is meant to protect you in case of a real emergency, such as a job loss, health issues, or emergency repairs. The key to this account is ensuring that it’s topped up and you’re only using it for emergencies. That means you shouldn’t tap into this cash if you want to take a vacation or want to treat yourself to a nice meal.
Don’t combine everything
Some couples find that combining all of their finances is the easiest way to budget, but that method doesn’t work for everyone. Generally, you’ll want to have at least one joint bank account. You would also want to keep your own individual accounts. By doing this, you’ll keep some independence while having access to an account where the shared expenses come from. Having separate accounts can be healthy for the relationship, as both partners don’t need to know every detail about each others’ finances.
Do create a budget
Talking about money as a married couple is a good start, but you’ll need to put your plans into motion. The easiest way to keep the family finances in check is to create a budget. Creating a budget is easy since all you need to do is list your combined income and then all of your expenses. Be sure not to forget your goals such as vacations, home down payment, or retirement savings. It’s worth mentioning that budgets are meant to be fluid - since both partners will have different expenses and income, it’s not fair to expect each partner to contribute exactly 50%.
Don’t micromanage
When creating a budget or discussing goals, you may unintentionally start micromanaging things. For example, one partner may suggest different saving strategies. Although these suggestions may be well-intentioned, they may annoy the other person. In all relationships, compromise is a must, so don’t stress about the small things if you’re both on the path to reaching your goals.
Do start investing
Once your goals and finances are established, you need to think about how you want to invest your money. The problem is, what you’re saving for may affect your investment strategy. For example, if your goal is to buy a home, you likely want to keep your home in low-risk investments. However, if you’re saving for your retirement, which may be decades away, investments that offer higher potential returns may be more appealing. Keep in mind that each person may have a different risk tolerance, so what you invest in needs to make sense for both partners.
Don’t leave all money decisions to one person
It’s very common for couples to leave the money decisions to a single individual. This might practically make the most sense, but it could have many unintended consequences. For example, the decision maker may end up investing in things that don't make sense for the family. More importantly, both partners should know vital information about the family finances such as where the life insurance policies are held, how to access the investments, and how to pay the mortgage. If both couples are in the know, it’ll make things much easier in case of an emergency.
The bottom line
Combining your finances doesn't always go smoothly. One partner may prefer to budget one way while the other partner may prefer a certain financial institution. In the end, you need to find some common ground or a solution that works for both parties. You won’t always see eye-to-eye, but don’t forget that you’re in it together.
Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog
Money We Have is one of Canada’s most trusted sources when it comes to money and travel. As a completely self-taught, do-it-yourself investor with no formal training, he makes money easy to understand for all Canadians. His specialties include personal finance, budget travel, millennial money, credit cards, and trending destinations.