Handling Finances as Newly-Weds

By Christine H.

Lots of life changes happen when you’re a student. Often, there’s a move involved. You learn how to become financially and practically independent. And for many of us, it’s also a time when we’re looking for a partner to spend the rest of our lives with. All of these factors can complicate finances. When you get engaged, future finances are probably the last thing on your mind. Few couples think about how they’ll handle a budget as a team. Instead, we just assume that things will work out.

Financial difficulties are the most common marital stress, according to a study by SunTrust Bank. And further research from Kansas State University shows that arguments about finances early on in a relationship are the single biggest danger sign of divorce. This is true whatever the couple’s income is, whether they’re struggling with minimum-wage jobs, or living comfortably with 100k/year.

If you don’t make a financial plan with your spouse early on, you could be setting yourself up for failure. It’s not uncommon for financial and relationship counselors to hear about a husband hiding the fact that he was laid off and is going into serious debt to pay for the house. Or think about these other common conflicts:

• The wife spending the couple’s savings on a fancy television instead of continuing to save for the vacation that the husband wanted.
• One person insisting on a house or apartment that’s outside of the income range right now, while the other wants to avoid going into too much debt.
• Spending years paying off early debt from an elaborate wedding.
• A new husband needing to borrow money from parents in order to make ends meet, while the wife doesn’t want to be in debt to her in-laws.

Some of these scenarios may feel all too familiar. However, we don’t consider how dangerous these arguments can actually be, or take action to correct it.

Money and Stress

There are a few things to consider while you’re looking at your approach as a couple to finances. For one thing, it’s important to realize that a disconnect in how you both prefer to handle money and what your spending and saving habits are can put major strain on the relationship. It may be hard to imagine right now, but it’s true.

For another thing, it’s important to acknowledge that you’re in it together. If just one person is taking the helm on finances, it’s important for the other party to at least understand what’s going on. Far too many new grooms are, by default, assuming all financial responsibility and cracking under the strain when things don’t go quite as planned.

That’s why it’s important to have a plan, whatever that plan may be. This should be an open discussion between the two of you.

A Few Different Approaches

There’s no one “right” way for couples to handle finances. For some, merging bank accounts and streamlining the finances that way is the best approach. Others want to maintain their separate accounts, and that doesn’t mean that they’re any less committed as a couple. Some couples want both parties highly involved in the day-to-day operations, whereas others designate one person to handle most of it. Set it up however you’d like, but have a plan.

Some Questions to Get the Discussion Started

1. Are you in debt? Do you ever plan to be? What do you believe is worth going into debt for?
2. How many credit cards do you have and how do you use them?
3. Do you set a monthly budget? Have you ever? Are you good at sticking to it?
4. When’s the last time you incurred a late fee for nonpayment?
5. Financially, where do you imagine we’ll be in 5 years? 10? 20?
6. How do you think we should pay for our children’s expenses and college?
7. If we suddenly had $3,000 surplus right now, how would you want to spend it?

Some Money-Smart Tips for Newlyweds

• Live somewhere that reflects your actual income. Just because you’re married doesn’t mean you have to move into a big house like what your parents have. It took them a while to get to that point. As newlyweds, and people just starting out in life, you might need to carefully consider the cost of an extra bedroom. This post has a really helpful price-comparison.
• Discuss whether you want to have kids, and whether one of you will be a stay-at-home caretaker when that time comes.
• Speaking of your home, you might be excited to nest, but keep costs low at first. Nice furniture and decor can quickly drain your savings. Instead, save on decorating your new home with some great tips from this article.
• Always err on the side of caution, and save for the future instead. Life WILL get more expensive, even though all you see now is how you’ll make better money in the future.
• Don’t eat out too much. Instead, cook together at home whenever possible.
• Always communicate! As this post states, it’s very easy for people to have a different vision for the future, and never know. Talk about finances before it becomes a taboo subject between the two of you.