Marriage and Money: A Newlywed’s Guide to Joint Finances

Getting married is a milestone unlike any other. It signifies partnership and shared responsibility, now and in the years ahead. Joint decision-making on everything from dinner plans to where you will live, and what your family will look like in the years to come, is at the core of a successful marriage.

Money, budgeting for your life now, and financial planning for the future are a big part of your new shared life. Marriage brings many advantages, but it also requires you to decide how to spend, save, and invest during your life together.

Start on the Same Page

Having honest, judgment-free conversations about money, values, and goals is critical. You may have had these conversations before you married, and already have a plan for how your combined finances will work. If not, it’s important to do it now. Comfort level in talking about money can often tie back to childhood experiences and how parents handled money.

It’s a lot to unpack when you are attempting to combine two different sets of expectations and money mindsets that have been ingrained for decades. Taking these conversations at a pace that is comfortable for both partners and building in time to take a break and regroup if things get tense is important.

The goal is to establish trust and uncover things that can inadvertently undermine your partnership. Use of credit, paying bills on time, and impulse spending are some examples of things that seem small but can trigger emotional responses and distrust.  It can be helpful to work with a financial advisor who specializes in these types of conversations to help uncover each person’s deepest goals and fears about money. This can help you set some ground rules you are both comfortable with. 

Joint, Separate, or Both?

From a practical standpoint, one of the first decisions is whether to have a joint account, separate accounts, or some combination of both. This applies to checking, savings, and credit cards. While joint accounts used to be standard, many couples now opt for a combination, in which each person may keep existing accounts and the couple opens new accounts in both names for household expenses and joint savings. This can get complicated, so it’s a good idea to discuss in advance how much each person puts into the joint account, and how much is retained in personal accounts. Setting up direct deposits into the joint account, paying all bills, and then automating the transfer to a personal account may simplify things and keep everyone on the same page.

If one partner has better credit, it may make sense to add the other spouse to an existing credit card. This can also be an advantage if you have a rewards credit card. Opening a joint credit card is also possible, but it will create a hard pull on both spouses’ credit reports.

Budgeting for Saving and Spending

Creating a budget together can help build a strong, trusting money partnership. One approach is to use a 50/30/20 rule, in which 50% of the budget is spent on needs, 30% on wants, and 20% goes automatically into savings.

Depending on goals, the formula can be tweaked as needed. For example, if buying a home quickly is a goal, the “wants” category could shrink and the “savings” percentage could grow.

It’s important to be clear on what goes into each category, and how much that item costs. For example, car payments are a “need”. But if one partner’s goal is to pay off a Honda while the other wants to lease a new Porsche, that could be an issue. Creating a spreadsheet with all of these categories and amounts is a good way to make sure each partner agrees. Even if there’s a discrepancy, there’s usually a way to come to consensus. This could mean moving something out of the shared budget and into a personal account.

Setting up automated payments can lessen the chore of bill paying and can ensure that one person in the couple doesn’t get stuck with the task each month.

The best part of budgeting is getting beyond the day-to-day and determining your shared goals. Do you want to buy a house, start a business, save for kids’ education, or set up a travel fund? Talking over what is important to you both, and then using the budgeting process to ensure that you are consistently funding those dreams and goals can alleviate the tedium and make it easier for both partners to stay on course and avoid impulse spending. Regularly reviewing your budget and ensuring that your spending and saving are on track should be a monthly or at least quarterly activity.

Tax Planning for Two

For many couples, there’s a “marriage benefit” on income taxes. Typically, couples with a salary disparity save the most, as the couple filing jointly  may be in a lower tax bracket than the higher earner would be in as a single filer. The standard deduction is also much higher, reducing the tax liability.

There are other benefits as well. The federal gift tax exclusion is doubled for a married couple, to $36,000 from the $18,000 a single person can give without triggering a tax. Estate planning also gets a boost, as married couples can gift up to $27.22 million.

There are also IRA benefits for married couples. A spousal IRA allows a spouse without income to make a tax-deductible contribution to an IRA of up to $7,000 in 2024. For couples who are covered by a retirement plan at work but want to contribute to an IRA, the income phaseout limits for the tax deduction are higher for married couples. The full deduction can be taken at salary levels up to $123,000, and a partial deduction can be taken up to $143,000.

The Bottom Line

Getting married and starting a financial journey together is one of the most significant things you’ll do. It may take some time to get the pieces in place, but working through it as a team will make your partnership stronger.

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The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.

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