Managing finances in a marriage: 7 tips for couples

According to recent Guardian research, the three things causing the most stress to Americans are all wallet-related: money and finances, the economy and inflation, and paying off debt. If you’re recently married, this statistic may be of particular concern to you and your spouse, because arguing about money is a leading predictor of divorce.¹ In fact, it’s estimated that financial problems contribute to 20-40% of all divorces, with approximately 41% of divorced GenXers and 29% of divorced Baby Boomers saying that financial disagreements led to the dissolution of their marriages.²

Fortunately, there's a flip side to these statistics: creating a solid financial strategy as a team can help couples build a more stable and harmonious life together. By working together — engaging in open communication about goals, budgeting, saving, investing, and managing debt — their partnership, reduce financial stress, and pave the way for a more secure and prosperous future. The tips and insights in this article can help you better understand:

• How to discuss finances and money management

• Key financial issues for couples

• Ways to set and achieve financial goals

• Creating a workable budget and saving plans

#1. Prepare for “the money talk”

Many newly-married couples find money and finances to be among the most difficult subjects to address together. Even those couples who communicate freely, openly, and honestly about other issues can become closed, guarded, and defensive when the conversation turns to the nuts and bolts of handling money — even something as basic as whether to maintain separate accounts. Which is why financial advisors and marriage counselors alike often recommend preparing in advance by doing these things:

1. Keep in mind that money discussions often carry emotional baggage, and approach them with empathy and patience.

2. Remember that your partner's spending habits may differ from your own, and that financial habits and values are typically shaped by upbringing and life experiences.

3. Establish that open and honest communication will be the foundation for your conversations.

4. Create a “safe space” where both partners can share their goals, fears, and expectations without judgment. Allow each other to bring up sensitive topics like a spouse's debts or poor credit scores.

5. Take time to learn about each other's financial histories and attitudes, which can provide valuable insights into your financial compatibility.

6. Agree to work as a team to establish goals and guidelines for spending money and create a budget aligning with your shared vision for the future.

Money is an emotional subject. Even seemingly harmless topics like joint accounts can result in a heated discussion. Using open communication, empathy, and collaboration to work out your financial differences will not only improve how you manage money, but it can also help strengthen the emotional bond in your marriage.

#2. Discuss your current finances and how to handle financial matters moving forward.

Before a couple can establish long-term goals and develop a strategy for achieving them, it is important that they address the basics, including their current financial status:

• Each person should share their present financial situation: An honest inventory including salary, bank accounts, investment accounts, retirement savings, life insurance policies, and outstanding debts and obligations – including student debt, auto loans, credit card debt, and child support payments – will help you accurately assess where you stand and help you to start discussing where you’re going as a couple.

• Decide how to divvy up financial responsibilities moving forward: If one partner is much more financially astute than the other, should they shoulder the bulk of the responsibility? Or will each of you take on an equal share – with, for example, one handling daily budgeting and tax preparation and the other handling savings and investments?

• Get down to “brass tacks”: How will you split household and other expenses? Will you comingle funds in a joint bank account or maintain separate bank accounts? How much of your income will each of you devote to long-term savings? And so on.

• Commit to ongoing discussions about money, lifestyle, spending, and future plans Circumstances and needs are sure to change throughout the course of a marriage, and regular communication will leave you better prepared to address the changes and handle the challenges together.

#3. Identify your shared financial goals

While it’s impossible to anticipate all the changes and challenges that lie ahead, you should work together to develop a vision of your future life goals and, by extension, future financial goals. With an idea of where you want to be tomorrow, you’ll be better prepared to make decisions about budgeting, saving money, and investing today. Here’s how to simplify what is often a complex conversation:

• Discuss individual goals: Begin by talking about each person's individual goals. These might include paying off student loans, buying a sailboat, engaging in a costly hobby, or starting a small business. A frank understanding of each other's personal aspirations is essential.

• Identify shared goals: After discussing individual goals, identify goals that you want to achieve as a couple. These might include putting a down payment on a house, starting a family, becoming world travelers, or retiring early. Once you’ve identified and agreed on your shared goals, prioritize them.

#4. Create a budget

You’ve determined where you are. You’ve discussed where you’re going. The next step is to bridge the gap between those points – by developing a monthly budget that allows you to meet your expenses today while saving enough to reach your goals tomorrow. There are many different methods for creating a budget, but one of the simplest and most popular is the 50/30/20 budget. Here are the key steps involved:

• Calculate your combined monthly after-tax income.

• Calculate essential expenses, which should comprise approximately 50% of after-tax income. If they exceed 50%, try to make some adjustments to your spending habits.

• Set aside 30% of after-tax income for discretionary expenses such as dining out, streaming services and vacations. If 30% won't cover them, consider what you might cut out.

• If possible, allocate at least 20% of after-tax income towards savings and debt repayment. This includes emergency funds, retirement contributions, loan repayments and saving for long-term goals such as starting a family or buying a house.

• Keep records to help you stay within the allotted percentages.

• Regularly review your budget and adjust it as necessary, especially if there is a significant change in your income or circumstances.

It’s important to note that these percentages are a general guideline and numbers can be modified to fit your specific circumstances, or you can consider another budgeting strategy. Whatever you decide is right for you, the key to success can be summed up in seven words: make a budget – and stick to it.

#5. Develop a savings plan

One of the best ways for couples to boost their financial stability and financial confidence is to save money for the future. Most financial advisors would urge beginning as soon as possible, even if you can only afford to set aside a small fraction of your combined income. Try to have at least two different savings “Buckets”:

• Short term: You can begin by setting up a dedicated savings account specifically for an emergency fund and other short-term goals, such as a summer vacation. These accounts are low-risk and easily accessible, allowing you to deposit and withdraw money as needed.

• Long term: Although retirement may be a long way off for recently-married couples, it’s never too soon to start saving and taking advantage of the tax benefits available from most retirement savings vehicles. If at all possible, couples should try to take advantage of tax-advantaged accounts such as Individual Retirement Accounts (IRAs), Roth IRAs and 401(k) plans at work that may also offer employer matching contributions. These accounts help money grow faster by offering benefits that may include tax deductions on contributions, tax-free growth, or tax-free withdrawals, depending on the type of account.

#6. Think about investing

For those with ambitious long-term goals, the next step may be learning how to invest. While traditional savings accounts and money market funds are great savings vehicles for short-term goals such as an emergency fund or a summer getaway, long-term goals like a home purchase may require couples to invest in higher-yielding vehicles such as stocks, bonds, mutual funds, or exchange-traded funds (ETFs). But a higher yield means higher risk, so you'll want to take some time to learn the ropes before you begin.

Fortunately, there are many ways to learn about investing. Books and podcasts, online courses from platforms like Coursera, and financial websites like Investopedia can all help you get up to speed on key concepts and investments. And if you and your partner need some help navigating the many different types of investment vehicles you might want to think about consulting with a financial professional, preferably someone with experience in helping couples sort out marriage finances.

#7. Consider insurance, tax, and estate planning issues

Even if you’re newly married, now’s a great time to address some of the financial “odds and ends” that sometimes get overlooked or put on the back burner for another day. These include:

• Insurance: Recently married couples should update their health, life, and disability insurance policies to reflect their new marital status and ensure adequate coverage for both partners. Also consider whether it makes financial sense to combine policies and coverage or maintain separate ones.

• Taxes: After getting married, you should update your tax withholding and filing status. This process includes submitting new Form W-4s and Employee's Withholding Allowance Certificates featuring your new marital status and number of W-2 withholding allowances.

• Basic estate planning: Even young couples should create or update their wills and make sure to designate beneficiaries (typically one’s spouse) for life insurance policies, investment accounts, retirement plans, and other key assets. You should also establish powers of attorney to give each partner decision-making authority in case of incapacitation. These steps not only provide peace of mind, but also demonstrate a commitment to protecting each other's financial interests in the event of unforeseen circumstances.

As you delver deeper into these areas, think about consulting a financial advisor or tax professional. You'll find that professional guidance can go a long way toward minimizing financial anxieties and simplifying some very complex issues.

Guardian can help you get started

Getting comfortable with discussing money is one of the first steps in a couple’s financial journey. If you need additional help getting started or moving forward, a Guardian financial professional can help you through the process and create a plan you can both embrace. To find one near you, just fill in your zip code and click below.

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