Why it is so important for people who are dealing with finances in marriage to come up with personal financial advice?Ask any financial advisor about the best way to approach to couples’ finances, and unsurprisingly, you’ll probably find that you get a pretty wide range of answers.
The truth boils down to what is right for one married couple may not be right for another. While tips for married couples abound, our experience has shown time and again that the following three financial tips for married couples are among the most helpful time and time again. This is so particularly for couples who have recently moved in together.
Finance in marriage tip #1 – To share accounts or not?
According to the popular site Investopedia, deciding whether or not to have a joint bank account is one of the most difficult financial decisions a couple can make. It’s a tougher choice because the decision determines how you’ll manage your money individually within wedlock.
Usually, couples take one of three possible approaches to making the decision of whether or not to have a joint account or separate accounts.
To separate accounts. To do this successfully, couples must first figure out how each of the house-related bills will get taken care of and by whom. The advantage of this approach is that after determining who is responsible for what each has their own account that they look after “on their own” independently of any joint relationship to the account.
That being said, it can be more difficult for a couple to keep track of their yearly budget when they adopt a separate bank account method of managing finances in marriage especially as it relates to tracking expenditures. It can also keep reaching financial targets and goals, like paying down a house somewhat fragmented as not all household-related bank accounts are aligned in the exact same direction.
The next option is to have a joint bank account. When it comes to finances in marriage, this is the option that most married couples are generally going to ideally opt for. Married couples that have a joint bank account will have a more streamlined way of planning their financial goals as one account allows for more cohesion than separate accounts do.
However, this option also has its drawbacks. Having both couples’ eyes on the account can on occasion lead to judgment on the other partner’s spending habits. In some instances, this judgment or questioning can lead to resentment within certain married couples’ financial relationship.
The third and final option that a financial advisor may suggest you adopt is actually a combination of the two options presented above. Meaning that the married couple’s finances will be managed via a joint bank account for all shared and common expenses but have separate individual accounts for individual personal spending.
This option retains the benefits of both approaches to married couples’ finances. As with all options presented here, a setback of this option is that it too can potentially be really difficult to manage in terms of keeping an eye on all household expenses at times.
Finance in marriage tip #2 – Talk about money goals
This leads to the next bit of advice about money that a financial advisor will likely give you … talking about your money goals.
While juggling a couple of bank accounts can be challenging, learning to talk about money can be equally difficult in certain instances. However learning to develop clear communication between married couples with regards to their household finances can absolutely help alleviate some or all of any confusion.
If you’re not sure where to start, then you may want to start with the basics. Decide how you want to deal with debt and savings, what you’re willing to spend on vacation and how much you’ll allocate for your retirement income.
If discussing money turns out to be too much of a hot topic in a married couple then it is recommended that your couple meet face to face with a financial advisor as soon as you can to help develop a personalized financial strategy that is suited to each couple’s needs and wants.
Clearly laying things out and understanding the financial objectives or at least defining them clearly with an impartial third-party member well versed in tackling married couples financial strategies can help you look honestly at your money situation.
Finance in marriage tip #3 – Consider paying down debt … as a couple
When it comes to finances in marriage, especially for newlyweds, it can be easy to try to simplify pre-marriage existing debts.
It goes without saying that many couples that get married may be carrying various debts prior to marriage such as car loans, university loans and the like. Simply put, people bring debt into a marriage.
In some married couples view on finances, it is the spouses believe that it is their significant other’s responsibility to pay down their own debt. While this is technically true, it is our opinion that this is a bad outlook to managing finances in marriage and so, shortsighted.
Living as a couple means that it is in each couple’s interest to assure that their spouse has the best credit score or financial health possible. Anything that can be done to lower your overall household debt will ultimately improve both of your credit scores.
Deciding for or against a joint bank account is only the first of many financial decisions you’ll have to make as a married couple.
Due to the emotional nature of finances in general, particularly in marriage, this topic can often bring about family discussions and discussions that can range from simple discussion to flat out disagreement in the handling of money. It is therefore important to remember talk to one another regularly about budgeting and money allocation and not underestimate the advice of a seasoned personal investment advisor.
If you find that in your couple you are constantly being tripped up by certain financial or monetary issues, it may be in your best interest to talk to a financial advisor who has experience dealing with the topic of how to best manage finances in marriage.
This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources, however, no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see a professional advisor for individual financial advice based on your personal circumstances. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd.