Money Management Tips for Newlyweds

Money Management Tips for Newlyweds

If you are recently married — or about to be married — congratulations on this joyful new chapter in your life! One of the ways you can start off on the right foot is to decide how you will manage your money. Agreeing on a plan for budgeting, saving, spending and investing can make your day-to-day money management easier and help you reach your individual and collective goals faster.

Share your financial goals

Start with the good stuff: envisioning where you’d like to be, and what you’d like to have, in a year, five years, 10 years, 20 years, right on through to retirement. Having that big-picture view can help motivate and inspire you both to be smart with your money. A house, kids, dream vacation, annual vacations, wealth to pass down through the generations — whatever your goals and dreams may be, share them with each other and talk about how you can reach them together.

Look openly at your current financial situation

Honesty is the foundation of any healthy relationship, so start from a place of openness. If you haven’t yet discussed your current finances — your respective incomes, credit scores, savings and investments, expenses and outstanding debt — take some time to do that now. Talk through your thoughts and concerns about money. Explain your strategies for saving, spending and paying off debt. Share your perceived strengths and weaknesses related to money management.

Assessing all of this now gives you the opportunity to play to each of your strengths and create a plan that works for you both. When you commit to collaborating early in your relationship, you lay the groundwork for smoother sailing ahead.

Define your approach

As a couple, will you manage your money using separate accounts, joint accounts or some combination of both? It’s a matter of personal preference, but one you definitely need to agree on to make your financial situation work.

Some couples choose to maintain their separate checking, savings and investment accounts. They assume responsibility for their own spending habits and for paying off any debt they bring into the marriage. Then they decide how they will split shared expenses — down the middle, proportionate to their income, etc. This approach gives each spouse autonomy and may reduce concerns over how the other spouse is spending. However, it does require a lot of communication and computation to keep track of who owes what, and it can get more complicated if you have children.

Other couples use a joint approach, with all income going into the same accounts and being managed together. It can be easier to track your money through this approach, but it may lead to resentment by the spouse who earns more and thus shoulders a larger part of financial obligations.

A third approach combines individual and joint accounts so that each partner has autonomy to manage their personal expenses and perhaps individual savings goals, while making it easier to manage the household budget, children’s education and other family finances through joint accounts.

Pay off debt

Debt can not only stand in the way of your goals but also place stress on you individually and as a couple. That’s why it’s so important to have a plan for paying off your debt, whether it’s the result of student loans, credit card spending or something else. Discuss the various options for paying down your debt with your spouse; you may want to explore a debt consolidation loan as well.

Save and invest

Saving money is important to any individual, couple or family. Saving can help you achieve your short-, medium- and long-term goals, as well as provide you with cash so you don’t always need to use credit for purchases or to manage unexpected costs. Saving is also important to building your wealth.

So critical is saving to smart money management that financial experts encourage adopting a “pay yourself first” mentality. Essentially, this means that you set aside a certain dollar amount or percentage of every paycheck before you spend any of it.

If you are enrolled in your employer’s 401(k) or other retirement program, the company will move funds from each paycheck to your retirement account per your instructions. Likewise, you can ask your bank to make automatic deposits to any individual retirement accounts (IRAs) you may have, as well as to other savings accounts, certificates of deposit (CDs) and investment vehicles.

Prepare for the unexpected

Every family should have a household emergency fund, holding enough savings to cover three to six months’ worth of living expenses in case of unexpected expenses or loss of income. If one or both of you already has an emergency fund, great! That can be the start of your combined household fund. (Dollar Bank’s Rainy Day Calculator can help you determine how much to keep in this account.)

Also explore the various types of insurance — home, life, disability, etc. — to ensure that an accident or a tragedy won’t wipe out your savings or security.

Create and stick to a household budget

Transparency into your finances makes it possible for you to look at actual numbers when you’re asking yourselves, “Can we afford to …?” A monthly household budget should include fixed expenses, such as your mortgage or rent payment and car payment; variable expenses, such as food, clothing and utilities; and discretionary funds you can spend as you like. This article offers details into creating a budget, along with smart strategies for sticking with it to stay on track toward your goals.

Establish guidelines for spending and saving

Your budget dictates where much of your money goes. But beyond that, how do you spend and save? If you’re more of a saver but your partner is more of a spender, you may find yourselves disagreeing about what to do with discretionary income. What happens when you have extra money — do you save it or spend it?

Say one of you receives a monetary gift, or a quarterly or annual bonus. Do you share in this windfall equally, or does it belong to the individual who earned it? Will it instantly go into your retirement or other savings account, or will you split it up so that half goes into savings and the other half toward home improvements, a vacation or something else you want or need? Setting expectations and guidelines around how you’ll spend or save, both within and beyond your budget, can help ensure you’re both satisfied with the way you’re managing your money.

Your financial success as a couple depends on your commitment to envisioning your path forward, establishing a plan and remaining dedicated to that plan. We’re here to help you succeed. Contact your local Dollar Bank office today to find out more about checking and savings accounts, debt solutions, insurance options and more.

This article is for general information purposes only and is not intended to provide legal, tax, accounting or financial advice. Any reliance on the information herein is solely and exclusively at your own risk and you are urged to do your own independent research. To the extent information herein references an outside resource or Internet site, Dollar Bank is not responsible for information, products or services obtained from outside sources and Dollar Bank will not be liable for any damages that may result from your access to outside resources. As always, please consult your own counsel, accountant, or other advisor regarding your specific situation.