After the cake has been eaten, all the champagne has been drunk, and all of the smiling guests have gone home from your extravagant wedding reception, it can be difficult for newlyweds to switch gears into real life again. It can sometimes be a challenge to change your mindset from “money is no object – it’s our BIG day!” to “we can’t afford that”.
But all of the excitement and fun doesn’t have to end along with your wedding reception. So, you’ve gotten married, had an awesome honeymoon (hopefully), and now you are back to reality and the real world. It’s all setting in and the responsibilities of being a married couple are now at the forefront of your mind. You may be thinking about your financial situation after spending all of that money on the wedding and honeymoon. This is totally normal and we’re here to provide some tips to help you adjust financially.
The management of finances can create stress in any marriage, but the following money tips for newlyweds can help keep the lines of communication open in order to avoid problems down the road.
Talk About Your Finances –
Being open and honest with your partner about your finances is critical. Let your spouse know how much credit card debt you are bringing into the marriage. As uncomfortable or embarrassing as it may be, it’s really important to lay it all out on the table so you can come up with a plan on how to tackle that debt. Ideally, you two would have discussed this already before getting married, but sometimes it doesn’t happen that way and that’s fine.
You and your spouse will also want to figure out how you will share marital and household expenses, including how much money each of you will contribute per month. Similarly, you will want to establish exactly where your payments will come from and if you want to use separate bank accounts or a shared account. That’s totally up to you and your spouse.
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Share Financial Responsibilities –
It goes without saying that each person in a relationship will have individual responsibilities, but finances should (most of the time) be shared. Having just one person in charge creates an unbalanced situation, and it can lead to arguments and resentment if one partner feels they must ask the other permission to spend money. There can be major power struggles when only one person makes all of the financial decisions and handles all of the money.
Consider Keeping Debts Separate –
Often times couples enter into marriage with his and her own big-ticket debt items, and it may be best to keep it that way. As a team, you will be working to tackle that debt together, but that doesn’t always mean adding your spouse’s name to your personal debt. Adding another person to a credit card or car loan can become problematic, particularly in the unfortunate event of a divorce. If your marriage ends and your ex-spouse fails to make payments, your credit score will suffer.
Understand Your Tax Bracket –
If both you and your spouse earn over $68,000 in taxable income, combining those salaries will place you in a higher tax bracket, and you will face up to 28 percent in taxes versus the 25 percent you paid as singles. So be prepared by making sure you have plenty deducted from your paychecks throughout the year so you won’t be faced with a tax bill when April rolls around.
Discuss the “What If’s” –
Although no one expects a divorce, it is important to understand that it is certainly a possibility, especially if you look at recent statistics. Though it’s not a conversation you need to have daily, you and your spouse should discuss the “What If’s”, and what may happen if the relationship were to come to an end. Consider how you would split your finances and possessions to avoid even bigger surprises if worse comes to worst. You may even want to speak to an estate planning attorney for some helpful advice and guidance.
Get Both Partners Involved –
It doesn’t matter how your parents did their budget, or how society wants you to handle your budget. It’s simple – give the day-to-day budgeting responsibilities to the person who does it best, the one who is most detailed and precise with numbers. This will ensure your budget is always accurate and reliable.
While it may be up to one of you to keep the budget current, make sure both of you are involved in making your budget a success. Have sit-down conversations regularly and go over how much you have to spend in each area of your budget. This will also save you some marital stress that might come as a result of financial arguments. If only one person does the budget, that person becomes the ‘bad guy’, always telling the other partner they can’t purchase something because there’s no money left. But when both people are involved, that partner will know there’s no money to purchase the desired item, and the situation resolves itself without one partner having to constantly rein in the spending.
Take It Slow –
Don’t try to overextend your finances by immediately purchasing everything you think you’re supposed to have as a married couple. Rome wasn’t built in a day. It’s going to take some time to accumulate furniture, appliances, camping equipment, lawn and garden supplies, etc. Don’t feel like your home has to look like something straight out of Pinterest in order for you to be happy.
Live within your means, and only acquire new things as you can afford them. Don’t overextend your finances and cause your marriage unnecessary financial stress. Live within your means. Enjoy the days spent eating ramen noodles in camping chairs, because those days won’t last forever.
Marriage isn’t always easy and if you throw financial issues into the mix that can spell disaster and even divorce. Don’t complicate things after your wedding by trying to spend too much, too fast. Establish a realistic household budget that you and your partner can stick to, as a couple, and enjoy the next chapter of your new life together. We hope that you’ll use the tips mentioned above and work together to create a strong financial foundation.
For more advice on how to manage your finances as a married couple, contact our certified credit counselors for more tips and advice on household budgets, debt management, and how to save to secure your financial future.