Marriage is built on a foundation of sharing and compromise. While that might be true, sharing money in a marriage can be an emotional, sticky mess. Without the right tools and a great deal of honesty, couples stop working together on their finances and start blaming each other for tough situations. After all, this is money you work hard to earn and save. It’s natural to feel strongly about where it should be spent.
Notice, however, that we said, “without the right tools.” We’ve seen couples fighting over money, and we’ve seen couples working as a team to reach lofty goals. You and your spouse can easily be the latter if you approach the subject with care. Your communication makes all the difference when it comes to merging your finances after marriage.
Over the years, we’ve counseled many couples through the merging process. Here is a list of 8 tips to merge your finances that are sure to keep communication running smoothly.
1. Be completely transparent. You could be tempted to hide certain details of your financial health from your partner. Without complete honesty, however, you aren’t able to be on the same page about where you stand now and where you’d like to be in the future. Create a safe space without judgment to discuss the parts of your money management you would prefer to keep to yourself, such as debt or a low credit score.
2. Choose your goals together. After identifying where you both stand in your financial journey, take some time to dream a little. Or a lot. Where do you want to be in five years? Do you want to eliminate your debt? Buy a new house? Travel? Deciding on your biggest financial goals is an essential step toward creating a plan.
3. Discuss your desired lifestyle. Before you create a budget, you need to know what you and your spouse plan on spending. Talk through the possibilities of your life together and what that looks like to you both. Right now, you may not be living the lifestyle of your dreams. But, whatever that future lifestyle is, be sure that you both are working toward the same big picture.
4. Create a budget. Rather than viewing your budget as a way to restrict each other’s spending, think of it as a guideline. You and your spouse can use a budget to decide together where your priorities lie and where the money should be spent. This step avoids misunderstandings about where you’re spending.
5. Set up a joint account. It may sound easier to keep your finances separate and avoid merging altogether. Although, consider that when it comes time for large purchases and saving for your future, sharing an account helps you stay in tune with how you’re spending and how it aligns with your plan.
6. Designate an emergency fund. Discuss what you both consider to be an emergency and decide together how you might use an emergency fund. Having this money set aside helps a couple not to blame each other when things don’t go according to plan. When you have the extra funds to cover surprise expenses, the pressure is off so that you can focus on your relationship instead of financial stress.
Tip: It is an excellent goal to save three to six months’ living expenses.
7. Set a schedule. It isn’t effective in the long-term to have one conversation about finances and then never discuss it again. Set a schedule to check in with your spouse every few weeks or every month to regroup. A check-in will help you feel like you’re holding each other accountable, staying on track for your future, and, most importantly: working together.
8. Consult an advisor. Money isn’t always cut and dry. We’re humans and have emotions attached to money that we sometimes can’t see past when making decisions. A financial advisor offers an objective view of your marriage’s finances and helps you to create a plan that works for both parties.
As you enter into this new phase together, make finances a collaborative effort, rather than a point of tension. This period in your life is exciting and shouldn’t be overshadowed by financial burden. With these tips, you and your spouse can not only communicate with ease about financial matters but also make your dreams a reality with proper planning.
Contact Southwestern Investment Group to schedule a consultation with a local advisor. Our team of experts works with you and your spouse to design a long-term financial strategy that fits your life.
