When couples become engaged and/or get married, they’re making a commitment to share their lives together — along with the many challenges that life can bring. And all too often, some of the biggest trials new couples must face in life together are financial ones. In fact, according to a 2021 Fidelity Investments study, 20% of surveyed couples name money-related issues as the leading challenge to their relationships.
So, before taking the plunge, it’s wise for couples to take a few finance-related steps together to ensure that they’re on the same page when it comes to their money — and to set themselves up for financial success down the road. If you and your partner are planning to tie the knot soon (or have recently taken your vows), consider these 15 money-focused tips that can help ensure financial wellness throughout the life of your relationship:
Create a budget that works for both of you: When it comes to budgeting for couples, the process doesn’t have to wait until you’re married — and it definitely shouldn’t be ignored once you’ve become official. Whether you’re putting together an engaged couple’s budget or a newlywed budget, sit down together with all of your bills and financial paperwork to understand how much money you’re each making and what you’re spending it on. Then create a budget that guides your pursuit of your financial goals, and do your best to stick to it.
Save for the wedding … and more: Once your engagement is official and you’ve made the announcement, consider opening a joint savings account allotted specifically to setting aside funds for your financial goals (including any wedding expenses you’ll be covering) and future expenses, as well as an emergency fund. Financial experts recommend saving at least 10% of your combined income each month, but you may want to adjust that amount up or down based on your current situation and goals.
Set savings goals together: Whether it’s saving up for the vacation you’ve always dreamed of, putting money aside for your first home, saving for retirement or all of the above, you’re sure to have some common financial goals. Be sure to spend some time discussing which of your savings-related goals are most important to you, then determine your investment strategy for reaching them and making disciplined saving a habit. The sooner you start saving, the more likely you are to reach all of your mutual financial goals.
(For couples looking to purchase a home, The Southern Bank’s Mortgages page offers a wealth of resources to help you secure a home loan, along with a link for easy online mortgage applications. In addition, this Southern Bank blog article provides helpful tips on preparing to apply for a mortgage and searching for a home. And by opening a Southern Bank savings account, you can simplify the savings process by giving yourself a designated place to set money aside for your down payment and other future expenses and investments.)
Merging finances together
Mutual financial checkup: While many couples may not discuss each other’s finances while dating — after all, before making a commitment to be together, finances are largely personal business — getting engaged or married makes them mutual business. Take the time to get to know one another’s financial situations, including your incomes, your debts and your spending habits. Knowing where you each stand in advance will help ease the process when it’s time to merge your finances as a married couple.
Decide — will we combine finances or not?: Couples getting married have a range of options when it comes to how they’ll handle their finances. While most couples opt to completely merge their finances with a joint checking account, you can also choose to link your personal accounts together or to move forward with your own individual accounts. The decision is a personal one, so think it over carefully together and choose the one that’s right for you and your lifestyle.
Live within your means: It may seem obvious, as everyone knows it’s important to spend less than you make each month, but doing so isn’t always that easy. Sometimes unexpected expenses can pop up. In other cases, an impulse buy causes financial strain. And while in some cases busting the budget is unavoidable, as a general rule, you should always try to live within your means — which means staying on your budget and avoiding the urge to always “keep up with the Joneses.” It can also be helpful to mutually set spending limits. Put your heads together to set a dollar amount you can spend without discussing the expense together — and when costs exceed that amount, be sure to talk about it together first.
Financial planning prior to getting married
Decide who will be responsible for what: A marriage is a partnership — and in most successful ones, the union extends to sharing financial duties, too. To set your mutual expectations in advance, decide going in who will handle which financial tasks. For example, one of you might handle paying the bills each month, while the other covers any responsibilities related to your long-term investments and savings goals.
Understand each other’s debt: As married partners, you’ll likely be making some big financial moves together. And when you take actions such as buying a home together, purchasing a car together, signing up for a joint credit card or otherwise taking out loans as a couple, your partner’s credit history could have an impact on the terms and rates you’re able to get. Depending on the state of your and your spouse’s debt and credit history, strategically, it could be a wiser choice for just one of you to apply for such loans until both of your credit ratings are in good places. So, before you merge your finances, it’s a good idea get to know where your partner’s debt and credit history stand.
Hold regular financial discussions: Both leading up to your wedding day and once you’re an official married couple, money-related discussions should be part of a healthy, ongoing conversation. To ensure you’re both up to date on recent financial developments, upcoming financial plans and decisions, the status of your savings and investments, and other money-related topics, consider having regular “financial date nights” during which you make a point of discussing all of these matters.
Tips for managing finances once married
Update your beneficiaries: Once you’ve officially tied the knot, you may want to consider making your new spouse the beneficiary on your life insurance policy, 401(k) plan and any other financial assets you may have. This can help ensure that, should anything happen to you, your spouse will be designated to collect the funds from those assets.
… and your tax withholdings: Once you’re married, you’ll have added options when you file your taxes, as you’ll now be able to choose between filing separately as individuals or filing jointly as a couple. The best option for you will largely depend on your financial situation, so take time to discuss your choices with your new spouse and a tax professional. The change in your marital status and filing status may also create a need to adjust the tax withholdings for your paychecks. This is another decision that might be best made with the help of a tax professional, and the IRS’s Tax Withholding Estimator tool could also be helpful in evaluating your options.
Update accounts with any name changes: If either (or both) of you are changing your name when you get married, you’ll want to make sure that your bank is aware of the change, along with any other organizations that may be holding your financial and investment assets. Different organizations and institutions have different processes for making these account updates, so reach out to each one separately to find out what you’ll need to do to make the changes official.
Planning for the future
Discuss your financial goals: As a soon-to-be or already-married couple, you’ve likely got a good idea of what one another’s lifestyle goals are — things such as where you’d like to live, whether or not you’d like to have kids, and what your career goals may be. But are you on the same page when it comes to your financial goals? Take the time to have an in-depth discussion about what your financial goals are — both over the long term and the short term — to see if you can get in sync about your approach to achieving them together.
Be ready to save for retirement: No matter what age you may be, it’s never too soon to start making plans for your retirement and making the investments needed to support a comfortable one. If you haven’t already, have an in-depth discussion about how you’ll save for your retirement, along with what you can start doing now to begin building a sizable retirement fund.
Create a will: While creating a will isn’t always a comfortable topic to think or talk about, it’s certainly an important one — especially for married couples and/or parents of children. Be sure to take the time to create a will together so that, if something were to happen to either of you, there’s a record of how you’d like for your financial assets to be handled after your passing.
At The Southern Bank, we pride ourselves on offering friendly, personalized service to all of our customers — and that includes providing guidance when you have questions about any of our banking services. To learn more about our Personal Banking services ranging from Mortgages to Personal Checking, Personal Loans, Savings & Money Market, Certificates of Deposit (CDs) and more, check out the Personal Banking page on our website, or visit one of our local branches for friendly, in-person service with a smile.