Money can be quite a sensitive topic because we all have varying experiences concerning it. You might have even heard from your married friends how paying bills makes marriage less romantic! But it’s important to tackle how you plan on managing your finances together so you can avoid arguments and complications in the long run. You’ll be transitioning from handling your finances independently to sharing the income and expenses with your better half for a lifetime. So, the best time to talk about money is now. Will you be opening a joint account or would you rather maintain separate savings accounts? How do you plan on managing your household budget? What kind of relationship do each of you have with money?
Finance is a very personal matter and all your decisions will ultimately be up to you as a couple, but to help you in this transition we talked to Mariel Bitanga, Registered Financial Planner and Founder of boutique financial planning firm Simply Finance for some helpful advice and practical tips on managing money for soon-to-wed and newlywed couples.
Talk about your current money habits
According to Mariel, there are key discussions couples must have regarding money. Here are some things you can ask each other when you start talking about your finances.
• How do you spend and invest money as individuals?
• How did your respective families handle money? Growing up, what were your perceptions towards money?
• How much are each of you currently earning?
• What are your current assets? Do you have debts?
• For soon-to-wed couples: How do you plan on paying for your wedding?
• What are your financial goals?
It’s important to be honest with each other about how much you’re earning, spending, and what your personal experiences with money are. These questions will help you align your money goals with one another especially as you prepare for your future. Mariel says, “Always be open to one another. If one is going through financial or career troubles, be honest about it so you could handle it as a couple rather than keep the burden alone.”
Plan for the future
“Protect each other using insurance and have savings for unforeseen emergencies. Nowadays, especially with the pandemic, anything can really happen. You must always make sure that your partner is protected,” says Mariel.
As much as possible, you should each have life and health insurance as well as emergency savings in place even before you get married. It’s also good to set aside education funds – if you plan on having children – retirement funds and memorial plans as early as possible. Time is your biggest ally when it comes to investing, so securing your finances now will ease you of worries in the future.
Consider having both a joint account and separate accounts
“The discussion of having joint and separate accounts is very crucial to a marriage. My honest opinion is to have both, especially if you are a two-income household,” says Mariel, “I think it’s still very empowering to have your own money and investments while also having joint accounts and investments as a couple.”
The benefit of having a joint account is that you can both monitor how your money comes in and out. Both of you can easily access your money should you encounter emergencies as well. Mariel also reiterates that finance is a very personal matter, so it is still up to you as a couple to decide what system works best for you.
Define your budget and contributions
“If you are a two-income household, define how much each of you would contribute to your joint account monthly and decide how much you will spend, save, and invest,” says Mariel. “For those who wish to keep separate personal accounts only, my suggestion is to just be clear with how much your family’s budget and expenses are as a whole and to pledge a specific amount monthly.”
Mariel also adds that open communication, commitment, and honesty are key when setting your budget.
Have quarterly or yearly financial planning sessions
“Handling money is a continuous process and it will also evolve through the years, that’s why yearly financial planning audits are recommended so you would know how to tweak or improve your systems,” says Mariel.
Doing a regular financial audit will help you discuss the current state of your finances and keep on improving your systems. Mariel also recommends consulting a registered financial planner to help you out and provide a different point of view.
Enjoy the process!
“Celebrate every milestone and win. Your financial path as a couple will never be a straight path so embrace the journey and keep on supporting each other’s dreams and career goals,” says Mariel.
Be open to the learning process because managing finances as a couple is new to both of you. Set your financial goals and work together to achieve them.