Last fall, my husband and I took the plunge and got married. We are incredibly happy and excited about planning our life together. However, there are many aspects of marriage that couples often overlook during honeymoon bliss. For example, how do you join your lives and finances? While the cost of the wedding alone is enough to make your head spin, many couples don’t even consider what hurdles come after. Fortunately, my husband and I have been discussing this since we first started getting serious. We knew how important it was to take these first financial steps after marriage.
Communication Is Key to a Successful Marriage
Although it isn’t the most romantic topic, having an honest conversation about the financial situation was an important step before we got married. Many fights often stem from money problems. It’s no wonder why it’s the second leading cause of divorce. Unfortunately, you can’t hide from your problems forever. And, now that we’re married, it affects us both.
As with most relationship issues, communication is key. Ensuring that we’re on the same page now will help us avoid huge arguments down the road. We’ve both been in relationships where this has caused problems in the past. In some cases, it was the reason they failed. However, talking about your values and difficulties lays a solid foundation for your relationship. And, it can bring you closer together as you work toward shared goals, dreams, retirement plans, or building a legacy to leave for the next generation.
Our First Financial Steps after Marriage
It’s nice to talk about planning for the future, but I wanted to know the actual financial steps after marriage. Was there an ordered process for combining your finances? Although it will be different for everyone, these were the first three items on our financial checklist.
1. Create a marital balance sheet.
If you are familiar with divorce proceedings, then you may know what this is. I know, it seems strange to create a marital balance sheet before the wedding, but hear me out. I believe everyone should conduct an annual financial review, whether they are single or in a relationship. The marital balance sheet is merely a spreadsheet to help you do this. It gives you a clear overview of your net worth and assets.
So, if it’s useful to divide your assets, you can understand how this would be helpful for combining your finances as well. We used this as a rough guide to assess our new financial situation. Taking an inventory of all our assets and liabilities as a couple showed us where we are starting our new life together. We began by making a list of all our sources of income, bank accounts, investment accounts, vehicles, and property. Then, we assessed all our debts including loans, mortgages, and credit cards. After we calculated our debt-to-income ratio, we realized that we have both established good savings and spending habits that will give us a step up.
Some couples go as far as pulling credit reports to see if they left anything out. We both have good credit ratings, so we didn’t feel this was necessary. But, friends who have done this told me it was a good way to keep each other honest and catch red flags early in the relationship. And, having this information will be helpful if you plan to apply for loans together.
2. Make a household budget.
The next conversation we had was about the budget. We had to figure out how to divide our living expenses and make a savings plan. So, after we moved in together, we added up our monthly bills and determined which expenses each of us would handle. Although we discussed a joint account for bills, we decided to split the responsibility. He continues to pay utilities since the recurring payments are already set up, and I handle the memberships and day-to-day expenses. When we did the math, this divided the financial obligations fairly. The money left after paying the bills then goes towards investment and savings accounts, the emergency fund, and finally to our “fun money”.
Many financial advisors and marriage counselors will tell you that couples should have joint accounts. However, we both felt that having personal spending money was important as well. So, we kept our individual accounts and then established joint accounts for our HSA and savings account for fun things like trips and other large purchases. This still gives us a shared goal and accounts. However, it also doesn’t place an unfair burden on the other person if one of us splurges. Those purchases come from individual accounts instead of using “our” money for personal purchases.
3. Set financial goals together.
Financial discussions don’t always have to be stressful either. Having these conversations early allowed us to have clear short-term and long-term financial goals. While paying down the remaining debt and saving for retirement are the main priorities, having fun along the way is also at the top of the list. Our fun money ensures we don’t get caught up in the numbers and remember to take time for ourselves and to enjoy life.
And, I’ve come to appreciate my husband even more. One of the more enjoyable conversations we had was about our investment strategies. We both had similar approaches and big dreams. So, this discussion got me even more fired up about our future.
Starting Out on the Right Foot
Everyone has their own financial problems to deal with. But, having open and honest communication allows you to start your marriage on the right foot. Personally, I believe that if you can talk about your money troubles, then you can talk about almost anything. Not only does this create greater trust, but it also allows us to plan more accurately.
And, creating these shared financial goals has made our relationship stronger. I no longer think in terms of “me” and “him,” but rather us. At the end of the day, we are on the same team, working for the same future.
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Jenny Smedra is an avid world traveler, ESL teacher, former archaeologist, and freelance writer. Choosing a life abroad had strengthened her commitment to finding ways to bring people together across language and cultural barriers. While most of her time is dedicated to either working with children, she also enjoys good friends, good food, and new adventures.