Financial Planning Tips for Couples Before Marriage

A few financial planning tips for couples before marriage include pooling incomes, listing expenses and setting savings goals. Couples can also reevaluate how they title assets and name beneficiaries on accounts to ensure their future together is protected.

Whether you decide to combine finances or keep them separate, it’s important to establish an emergency fund that covers three to six months of expenses.

Budgeting

For some couples, one of the most significant challenges early on in marriage involves establishing a shared financial plan. A budget is an essential tool for tracking and monitoring your combined spending habits, and determining if you need to make changes in your lifestyle.

It is also a good opportunity for you to discuss your partner’s money history, how they grew up and the money lessons they learned, and what their financial priorities are. This can help you understand where they are coming from and will be helpful if an unexpected expense comes up in the future.

You should also decide if you want to combine your finances or keep them separate and how much of your income each will be expected to contribute toward saving goals, household expenses and debt repayment. You should also create an emergency fund and decide whether you will combine your bank accounts or have some separate accounts.

It’s a good idea to track your spending for several weeks, using whatever method is easiest for you and your partner (an app on your phone, a budgeting spreadsheet, an online template, or even pen and paper). This will help you see how much money is going out each month, and identify areas of extra spending that may be easily cut. During this process, it’s important to keep in mind that circumstances will likely change throughout the life of your relationship, so you should review and update your budget regularly.

Debt Management

It may not be as fun as picking out wedding colors or planning a honeymoon, but debt is one of the most critical financial topics that newlyweds must discuss. It’s important to talk about how each of you manage your debt and agree on a plan for eliminating it. This could include a strategy like the snowball or avalanche method or even reducing your discretionary spending in order to save money to pay off your debt faster.

You also want to make sure you have a solid emergency savings plan in place. Life is unpredictable, so it’s essential to have a fund that will cover at least three to six months worth of expenses in case of a job loss or unexpected expense.

Once you’ve established a budget and paid off any outstanding debt, you can begin saving for long-term goals. This may include a new home, retirement account contributions, or investing in the stock market. Be sure to discuss your comfort level with risk and determine whether it makes sense to split investments evenly or go into more aggressive ones together. A financial planner can help you navigate these conversations and create a comprehensive financial plan that will work for your unique situation.

Savings Goals

As a couple, it’s helpful to identify what financial goals are most important. This helps prevent future conflict when one partner prioritizes saving for retirement while the other wants to travel extensively. Having open and honest discussions about these differences can help couples develop a plan that balances both interests.

Couples can also set intermediate or short-term savings goals to achieve within days, months, or up to a year. These are more tangible than long-term goals and can help make progress feel more manageable. These goals might include upgrading an automobile, paying off a credit card balance, or saving up for a vacation.

Having regular “money dates” can help couples discuss their day-to-day spending habits and set clear budget and savings goals. This can also prevent resentment as finances change throughout the course of a marriage.

While it might not sound romantic, discussing your finances before marriage is vital for a healthy relationship. These conversations can be difficult to initiate, but it’s worth the effort for a happy and secure financial future. Be sure to discuss your spending and saving habits, debts, income, and any plans to combine or maintain individual accounts. It’s also a good idea to review your joint and individual insurance coverage. This will protect your assets and prevent potential surprises down the road.

Joint vs. Separate Accounts

It’s important to consider whether or not you want to combine finances as a couple. The decision can impact how much transparency and teamwork you want with your partner’s money, but it shouldn’t be made lightly. Whether you choose to keep separate accounts, merge them or take a hybrid approach, it’s essential that you communicate regularly with your partner about your spending and saving habits.

Some couples may not feel ready to move into a joint account right away, especially if they come from a family with distinct financial backgrounds or are used to managing their own money independently. In this case, keeping separate accounts can give each partner a sense of autonomy and reduce disagreements over discretionary purchases. It can also protect one spouse from liability in the event of debt, as creditors can’t seize assets in the other person’s name (if you live in a community property state).

Of course, separating accounts doesn’t mean that couples should never talk about their finances. Many couples find that a middle ground is the best option: a shared savings or chequing account, where bills are paid and expenses are tracked together, but with individual accounts for personal purchases. This arrangement can help you both save toward shared goals and manage income disparities equitably. It can also prevent conflict over spending habits and limit misunderstandings about priorities and values.