Financial Planning as Newlyweds

By: Rachel Adams 

Q: We are in the early stages of planning our wedding and trying to handle the finances properly. Our wedding is being paid for in three parts- each side of our families are gifting us some money and we will be paying the difference. Should we deposit the gifted money into our own account, have our parents pay the vendors directly, or create a separate wedding checking account?

A: This is really more of a personal preference; but from a financial standpoint, creating a separate wedding checking account would streamline the process, and enable you to stay on track with your wedding budget. 

Q: One of our first goals after the wedding is to tackle some debt. What are some guidelines we can follow to prioritize which debt we should pay off first? Should we tackle them one by one or pay smaller amounts on several at the same time?

A: When you’re tackling debt there are a number of factors to consider: interest rate (credit cards), student loans (interest rates can be tiered based on time frame), and your mortgage. Keep in mind that not all debt is bad debt, and your mortgage can be viewed as good debt (on a case by case basis; once again there are a variety of factors to consider). Remember your home is a long-term investment, and there is potential to utilize it as an asset to your financial well-being. It doesn’t have to be a burden.

Q: After being engaged for a few months and combining our accounts, I have found out that my fiancé is much more of a spender than what I was previously aware. What is the best way to balance finances when one person is a spender and the other is a saver? 

A: Understanding your individual spending patterns is key to a successful financial future, and often the most overlooked. Before you decide to combine your finances, it is crucial to identify how your partner views money. Are they a spender or a saver? Do they have a tendency to live beyond their means? How many credit cards do they have, and what is their debt ratio on those cards? In an effort to remedy the situation, have a conversation with your fiancé, and express your concerns while offering a solution: keep your joint account for bills, but create a personal account for each of you designated for discretionary spending. 

Q: My fiancé and I have been trying to decide the best way to handle our money as we start our lives together while financial planning as newlyweds. From what we have read, there are three options; we can keep our money in separate accounts entirely, create a joint account for bills with each of us keeping a personal account, or combining our accounts completely. What do you recommend?

A: Finding a partner to share your life with is something to be celebrated, you’ve found that person to grow old with, to share all of life’s wonderful moments together, and also with whom you can weather the storms. You’re embarking on this new journey together, and it is no longer “my money”, but it’s “our money.” Which sounds easy, but realistically this is a significant change from what you’ve probably grown accustomed to; with the culture celebrating the independent woman, successful woman who is capable of taking care of herself and takes pride in that fact. (Which she should!) With that in mind, for newlywed couples, the second method seems to be favored with a higher success rate: create a joint account for bills with each of you keeping a personal account for discretionary spending money. The only thing I would add to that is to create a joint savings account, establish an emergency fund with savings to cover 3 months of all living expenses. 

Q: My parent’s marriage ended in part due to lack of communication about money and spending. I am terrified of this happening in my own marriage and want to be proactive on keeping the lines of communication open. What are some different ways my fiancé and I can avoid money being a problem in our marriage? 

A: Regular communication on this topic of money and spending needs to be established as a priority from the start. Set aside time quarterly (more or less depending on what you’re both comfortable with) to have that conversation: Have any of our goals & objectives changed? (Children, buying a home, saving for college, saving for a new car, saving for a trip to Europe) Establish what those goals and objectives are and go from there. If you’re not in agreement on a certain topic, it could be beneficial to get a third party opinion, someone you trust, perhaps a financial professional to help you make a well-informed decision.