Money isn’t the most exciting topic of conversation, but having a solid plan when it comes to your budget and married finances will set you up for all sorts of stability and success in the future. The topic comes with lots of questions, from whether or not you should join your bank accounts to how to put together (and stick to) a budget. We turned to the experts to fill us in on the basics of married finances, and how to make sure you and your partner are on the same page.
“Choosing whether or not to combine your finances as a couple is a personal decision that is specific to each couple’s needs,” says Matt Reiner, CFA, CFP, and CEO and co-founder of personal financial planning app Wela. “Some people feel more comfortable having their finances separate. Personally, I tell people that life is stressful enough—if you have the chance to simplify things, do it! By combining accounts, you’re simplifying your finances as a couple.” We asked Reiner to break down the pros and cons of combined bank accounts. “The pros of combining finances are the simplicity," he says, "as well as the potential opportunity to gain greater benefits by having your accounts combined. This could be in the form of faster accrual and easier use of credit card points or better costs and interest rates because the account has more funds in it. The cons come into play if you don’t truly know your spouse’s spending habits. If their habits are worse than you were led to believe, this could impact your credit and your future savings.”
So, when’s the best time to head to the bank and join those accounts? “Just to be safe, I’d wait until everything's signed, sealed, and delivered,” Reiner advises. “You have enough to worry about when planning the wedding! You’ll also want to use your married names when joining accounts, for which you’ll need your marriage certificate, updated social security cards, etc.”
What about a married life budget? “The best way to start working on a household budget is to understand where you are currently spending your money," Reiner says. "It’s hard to create a budget without being aware of spending habits, as well as your fixed expenses like rent or a mortgage and utilities. This will give you more clarity with which to build out your fixed and discretionary spending budgets, track what you’re spending, and cut some expenses (like cancelling one of your Netflix accounts or shopping for new car insurance)."
Reiner is a wealth of budgeting advice (no pun intended)—he did found a personal financial planning app, after all! “I’m a big believer in a budget based on a daily spending limit,” he says. “By understanding your income streams, fixed expenses, and what you’ll need to save on a monthly basis to meet both short- and long-term financial goals and experiences, you can create a daily spending limit that allows you to meet fixed expenses while still having enough left over to save for the future.” He compares Wela to Weight Watchers for your bank account. “It enables you to better understand how your spending decisions today impact financial goals that are months, years, or decades down the road, giving you constant awareness of your budget so you can positively change your financial habits.”
Got a big ticket item, like a trip or a house on your mind? “Plan ahead and start building saving into your budget right away," says Reiner. "Even if you’re not sure exactly how much you’ll need to save, create an estimate that you can work toward. You can always adjust how much you’re setting aside once you have a clearer picture. Include these savings alongside other things you’re saving for, like retirement or your kids’ college tuition. When you specify what you want to save, as well as what you have to spend on fixed expenses, you create a clear picture of how much money you have to work with and can align spending habits with your goals.”