Financial Moves to Make in Your First Year of Marriage

A small toy couple standing on top of a stack of coins next to a small red heart.

It’s probably not surprising to hear that finances are one of the leading causes of distress and divorce—especially among newlyweds. Therefore, it’s a topic that should be taken seriously to assure a lasting marriage. Understandably, money is hard to discuss, but addressing your finances early on in the marriage can help alleviate much stress. Of course, it helps to have some financial plan before you tie the knot, but the first year still remains an important time to make the right money moves.

Prevent Problems with a Prenup and Don’t Overspend on the Wedding

It’s been said many times before. Prenups are always a good idea, especially if one or both of you have assets at stake or if you have had a previous marriage. While not seen as a romantic gesture, it can prevent problems in the future. And of course, don’t feel pressured to overspend on your wedding, even if it’s tempting. There is no fun in starting a new life together with a heap of debt.

Discuss Your Financial History, Present, and Future

Before you walk down the aisle, have a sit-down with your spouse-to-be and discuss your financial history, present situation, and goals for the future. Among other details, you both should be aware of any student loans or outstanding debts. After marriage, your current credit rating will affect one another, so it’s also a good idea to exchange information such as your FICO score.

Things you should also talk about include spending style and future plans. Are you more of a saver or spender? When do you want to buy a home, have kids, and retire? What major purchases do you expect to make after marriage?

Share your hopes and aspirations, such as career plans, together. If you’re going to raise kids, will one of you take time off from work? All of these things will affect your budget going forward. Once you’re married, there are several other smart steps to take to avoid money-related conflict in the future.

Set a Budget

A young newlywed couple going over their finances and working on a budget.

The first financial move to make once you’ve seriously discussed your finances is to create a budget. To start, decide if you will combine your incomes or simply contribute a part of your salary to a joint spending account.

You should also figure out how much of your income will be allocated to each category. For example: 20% to rent or mortgage, 20% to savings, 15% to groceries, 10% to eating out, 10% for entertainment, and so on.

In addition, talk about any large purchases you plan to make in the short and long-term, or if you need to settle some debt before you do. For example, if you know you’ll need a car in a year, but won’t be buying a home any time soon, plan to allocate your savings towards a car purchase first.

The most important part of creating a budget once you’re married is to be on the same page with your spouse. If you’re having trouble, you can talk to a financial specialist, who can help you outline the ideal budget for your household.

Create Joint and/or Separate Banking Accounts

It may be uncomfortable to share all earnings and expenses with your partner, but it’s a good idea to do so, especially if there is a huge income disparity between the two of you. However, there are several options to consider as well. You can choose to separate all spending, you can combine everything, or you can mix and match.

A lot of couples choose to start off separating everything, which can work in the beginning, but it also begs the question—why get married if you’re unwilling to share? There is nothing wrong with doing so at first, but it will make things easier to at least have a joint bank account from which you can withdraw general shared expenses, such as housing.

Even if you decide on creating a joint account, most agree that it’s still important to have at least some financial independence. You can both deposit all income to one account, and then give each other an equal allowance to a separate private account. Alternatively, you can contribute a certain percentage of your income to a shared account. In addition, you might want to have a joint credit card that will be used for shared living expenses. It will make it easier to track your spending if all purchases are on one statement.

Create a Savings Plan

A young man and woman holding a white outline of a house to signify what they're saving money for.

For many reasons, and even if you’re wealthy, it’s wise to start a savings account and possibly a separate rainy day fund, which should have at least six months of income in case of an emergency.

In addition to that, you should contribute at least a little bit to a savings account monthly. It’ll be handy when you have to make a big-ticket purchase or have unexpected expenses. Feel free to have multiple savings accounts for separate goals such as vacations, a house, etc. Most banks will happily open several accounts for you.

Once you establish a savings account, you have to decide what you’ll do with the money. You can place it in a high-APY account so the money can grow with interest, or you can choose to invest it in a brokerage. Unless you’re familiar with the stock market, it’s best to consult a financial advisor to determine the level of risk you’re willing to take. Many banks today offer free in-person and online services that will help you build a portfolio.

Know that Finances Will Be an Ongoing Discussion

Obviously, money matters won’t be a one-time talk. In fact, finances may take some time to figure out. The first year of marriage is the most crucial, as it sets the precedent for your life together. However, prepare to make edits and adjustments as you go down the road. Lastly, even if one person takes over the regulation of your family’s finances, both parties should be involved. It’s a good idea to have regular financial check-ins with one another to make sure all is well.

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