Congratulations – you’ve tied the knot! But off-beat in-laws aren’t the only thing you’ve inherited as a newlywed. Student loans, credit card debt, car fees, credit line interest – they’re all joint expenses influencing your financial future as a couple.
Fortunately, there are steps you can take to make sure your finances are as harmoniously intertwined as your lives. Just ask Alyssa Fischer. Owner of the popular personal finance blog MixedUp Money, Fischer married her husband, Nick, last summer.
“It’s kind of crazy how much marriage changes everything about your money in such a short time,” she says. “Now you have to make all of your decisions based on someone else’s opinion as well as your own.”
Fortunately, there are steps you can take to achieve matrimonial – and financial – bliss.
If you’re carrying debt, now’s the time to put all your cards on the table. “After our wedding, we sat down and went through everything we could possibly think of that has to do with money,” says Fischer. Topics included savings, personal spending habits, credit card debt, retirement goals – nothing was off-limits.
Couples should also consider sharing credit card statements, investment account statements, bills and pay stubs to eliminate any room for misinterpretation or fudging of the facts. After all, warns Fischer, “The moment you get married, that debt becomes your debt so you want to make sure that you’re as honest with one another as possible.”
Unite your finances
Anniversary gifts aren’t the only upside of marriage. Sharing expenses can significantly lighten a couple’s financial burden. But deciding who pays what and when can put a strain on even the happiest unions. To avoid arguments, Fischer says she and her husband, “opened a joint savings account so that we could pay all of our bills through one account.”
Let’s say that you make a donation of $100, whether that’s to one charity or across a number of them. The federal government and the Ontario government will each reduce what you would otherwise owe them. Combined at current rates, that would give you back about $20.
A joint credit card can also keep everybody honest regarding individual spending habits. In fact, joint credit can enhance a poor-credit partner’s credit rating. That’s because when two people have a joint credit card account, the card’s history is included on both cardholders’ credit report.
Just make sure you select a credit card that reflects both partners’ financial goals. For example, Fischer and her husband travel a lot so they selected a credit card with low interest fees and an excellent travel rewards plan.
Keep discretionary spending discreet
Even the most financially aligned couples are likely to disagree on spending every now and then. Admits Fischer: “I’m very frugal so when I see that my husband buys coffee five times a week – that just irks me.”
To avoid unnecessary coffee clashes, Fischer says she and her husband “decided it’s best to keep our chequing accounts separate so that we still have some privacy.” A high-interest savings account can also help couples contribute towards individual savings goals.
Create a plan
Flush with money gifts, many newlywed couples make the mistake of not planning for the future. But your wedding windfall won’t last forever. For this reason, it pays to plan ahead. “At the end of each year, we sit down and map out what we spent that year on a monthly basis so that we have a better idea of annual expenses,” says Fischer. “Then we budget for the year ahead how much we’ll be spending each month and where that money will be going.”
By determining expenses, newlywed couples can also better save for the future. For example, Fischer and her husband regularly contribute to a TFSA and RRSP. And for emergency funds, they use a high-interest savings account, “just in case we need easy access to our money right away.”
It takes more than money to make a marriage work. But smart financial planning – and a little bit of honesty – can keep those wedding bells ringing.