A Guide on How to Manage Money Well in Marriage
Couples shouldn't go into marriage without understanding the financial ramifications of their union. Making informed decisions about money management in marriage is important. You should understand that financial issues are a common cause of conflict in marriage. If you don't give financial management enough consideration, you could be putting your marriage at risk. Before you take your vows, there are numerous decisions you have to make.
Marriage & Money: How to Make It Work?
Those marrying for the first time might not know everything they need to discuss with their future spouse. That's why researching the issue is important. The more preparation and research you put into financial planning, the better off you'll be. You need to establish a strong foundation for your marital future. While marrying is an emotional experience, you need to be practical about it as well. This means at some point you and your future spouse need to broach the issue of finances.
Avoiding Conflict
When you're starting out, the number one goal should be avoiding conflict. There are a lot of potential sources of conflict that can come up in a marriage. It's important to plan ahead to avoid them as much as possible. This is especially true when it comes to financial conflicts. As previously mentioned, finances are a huge source of conflict in a marriage. If you make clear financial plans from the outset, you can avoid these sources of conflict. It takes time and effort to develop financial management plans during marriage that lead to success.
One of the main goals of money management in marriage should be avoiding conflicts. There are certain things you can focus on in particular to avoid conflict. The following are four things you need to focus on to avoid conflict.
Communication
Communicating with your spouse is important when it comes to so many aspects of marriage. Finances are no exception. You should feel comfortable communicating with your spouse about financial concerns. You should also make sure you're listening when your spouse wants to communicate with you. Don't get in the habit of brushing financial issues under the rug. You should always be ready to communicate openly about them. Be proactive about solving problems. Financial problems that you push aside or overlook are likely to get worse over time.
Perhaps it's a good idea to designate some time on a monthly basis to discuss financial developments. This gives you the opportunity to identify problems and reevaluate goals. Setting time aside to discuss money issues prioritizes finances and ensures that you won't forget about them.
Honesty
Being honest with your spouse is important. Throughout a marriage, moments are likely to come up when you're tempted to hide a financial issue. If you're dishonest about finances, chances are high that your spouse will eventually find out. This can really undermine the strength of your marriage. From the beginning, be truthful and open when discussing finances. Never try to hide information or gloss over the truth. You don't want to let anything compromise the trust between you or your spouse.
At the same time, remember to be empathetic when your spouse tells you anything negative about your joint financial situation. Avoid judging or pointing fingers. If you work together, you can build your finances as a couple regardless what obstacles come up.
Planning
Simply communicating and being honest isn't enough. If you really want to succeed financially in your marriage, you also have to pursue goals with your spouse. You should set financial goals for both the long term and the short term. Developing your wealth is all about pursuing goals over time together. Figure out which financial goals you share in common with your spouse.
Once you've set goals, plan out in detail how you're going to achieve them together. Develop a strategy and make sure you're putting adequate research into how to achieve your goals. When you and your spouse are planning, make sure you're listening to and valuing the input of your spouse. You're both going to need to put in the work to meet your common goals. Therefore, make sure all of the work is not being put on the shoulder of either spouse.
Understanding
Financial issues create problems in a marriage when spouses aren't empathetic enough with one another. It's important to be understanding with your spouse. Make sure you're seeing things from their side. You and your spouse might not always be on equal ground in terms of income. Don't be judgemental or critical. Otherwise, you're more likely to struggle to get along.
Achieving financial goals takes effort and commitment. Make sure you're not expecting too much of your spouse. Being understanding will not only benefit your marriage in terms of financial issues, but in many different aspects of marriage.
Major Financial Management Decisions In a Marriage
It's important to familiarize yourself with all the decisions you'll need to make as a couple. There are numerous decisions you'll need to make with your spouse. You have a lot of options for how you'll approach money management in marriage. It's important to carefully consider all of these decisions. You need to figure out the best options for you and your spouse. You might also need to be versatile. The best solution for you and your spouse now might not be the best solution in five or 10 years. Be adaptable. Reevaluate as necessary over time.
Being aware of the decisions you need to make helps you plan for the future. At some point, you'll need to make decisions regarding all of the following seven factors mentioned below.
Joint vs. separate accounts
Some married couples join all of their money by opening joint bank accounts. Others keep their accounts separate. Still other married couples choose a solution in between. They might have their own individual accounts as well as joint accounts. There are advantages and disadvantages to each option.
- Having joint accounts may help to simplify financial management. You have fewer accounts to keep track of. However, joint accounts aren't for everyone. Some spouses might feel like they want to have more freedom, independence, and privacy than joint accounts offer. Joint accounts can complicate things when you want to buy a gift for your spouse for example.
- Keeping separate accounts might complicate things when you're paying for joint expenses. Also, joint accounts might lead to conflict if one spouse makes a lot more money than the other. Discuss your account options with your spouse to figure out the best solution in your situation.
Creating a Budget
Creating a budget is an important financial task for both indiviudals and married couples. With a budget, you set out a detailed plan for how you allocate your money each month. Creating a budget helps you analyze your income and expenses. Budgets help determine how much you can afford to save each month. They also help you to manage your spending. By creating a budget, you can help cut back on unnecessary spending and thereby save money over time.
You should sit down with your spouse and create a budget. You'll need to work together to do this. You might not always agree on how you should spend your money. However, you need to compromise with one another. With patience and effort, you should be able to devise a budget that you can both agree on.
Allocating Financial Chores
There are certain financial chores that you or your spouse will need to take care of on a routine basis. For example, you will need to keep up with credit card, insurance, and possibly mortgage payments. You need to decide which of you will be responsible for these tasks.
While you might be able to set up automatic payments on some accounts, you could be expected to make payments manually on other accounts. Overlooking a payment due date is stressful and could have negative financial consequences. That's why you need to communicate carefully with your spouse about making these payments.
Tax Filings
One important decision to make is whether to file taxes separately or jointly. The best decision on this issue depends on several factors. The IRS generally tries to encourage married couples to file jointly. You'll probably find that there are numerous financial advantages to doing so. Some of the credits you can qualify for by filing jointly are the Earned Income Tax Credit and the Child and Dependent Care Tax Credit.
However, there are some scenarios where filing separately is preferrable. For example, you might want to file separately if you have a lot of medical expenses you can claim out-of-pocket. You can discuss the filing status issue with your accountant to get a professional opinion. This is a complex issue. Therefore, it's best to discuss it with a professional with a thorough understanding of income tax law.
Handling Debt
The debt issue can be one of the most difficult financial issues to manage in a marriage. Debt can be a source of resentment. This is especially true if one individual comes into the marriage with signficantly more debt than the other.
However, it's important to realize that debt before a marriage is not jointly held. Therefore, the debt your spouse acquired before marrying you cannot negatively impact your credit. Debt taken on during the marriage is jointly held.
You and your spouse need to come to an agreement regarding how much debt to take on. You both also need to work together to pay off debt. Put thought into paying off debt when creating your budget. To succeed regarding money management in marriage, you should determine how much money you can put toward paying off debts. You won't make financial progress if you're not able to pay off debts. Therefore, you and your spouse need to come up with debt reduction strategies together.
Setting Goals
Pursuing long term smart financial goals together is essential. This is one of the most important aspects of money management in marriage. The two of you should have some accomplishments you want to make.
Owning a home is a common financial goal. It takes a lot of work and commitment to achieve this goal. There are also a lot of details you'll need to agree on. For example, you need to come to an agreement on which house to buy. You'll also need to decide how much you want to borrow to buy a home.
Another possible goal to work toward with your spouse is saving for the college education of your children. You may want to consider opening a savings account for this purpose. Below we offer you some of the best savings account options out there:
The goals of you and your spouse depend on factors like how old you are and how much income you're bringing in together.
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Considering the pre-nuptial agreement question
Any discussion of money management in marriage should mention the pre-nuptial agreement question. For many couples, having a pre-nuptial agreement in place is a good idea. Such an agreement can give both spouses greater peace of mind. If you and/or your spouse are coming in to the marriage with assets to protect, a pre-nuptial agreement could be a good idea. However, you need to make sure that you bring the issue up tactfully. A pre-nuptial agreement can be a sensitive issue, so tread carefully. You want to avoid feelings of resentment that could be damaging to your relationship.
Finally,
You should now know what the most important factors are when it comes to money management in marriage. Make sure you've thoroughly discussed all of the issues above with the person you're marrying. This will give you a firm foundation for managing finances as a couple. Discussing these issues will also help you with establishing long term financial goals.
It's important to be proactive about protecting your marriage. You've probably already heard it said that money problems break up a lot of marriages. Show your devotion to marital success by anticipating possible financial conflict and thereby avoiding it through communication, honesty, careful planning, and understanding.
Once you've discussed all these important issues, you can move forward confidently with your spouse. Together with your spouse, you can experience the satisfaction of meeting financial goals. Marriages makes sense financially. However, you need to know how to make marriage work for you financially. Get started today preparing for your financial future with your spouse. This will give you the best chances for enjoying a long, prosperous marriage.