7 Steps to a Financially Happy Marriage

So you have met that perfect person, and are either thinking about popping the big question, are already engaged and planning that dream wedding, or lets even assume maybe you are already married. It is never too late to both get on board to make some sound financial decisions to set you both off towards a secure future.

Below are some important things a couple should discuss prior to marriage if possible. Even after years of being married, it is never to late to talk about these items and make sure you are still on track towards the same goals.

1) Mindset Toward Money

How do you and your partner feel about savings and spending? Do you both feel that the majority, or a big chunk of your money is an important asset towards your future, or do you spend what you bring in? While you might not both feel the same about financial security and spending habits, it is healthy to at least talk about them openly and know where each other stands. How do you both feel about setting savings goals?

An excellent way of establishing your attitudes towards money is to set obtainable goals. Whether it be setting aside so much money per pay towards a vacation goal, or a longer term savings plan towards a down payment on a home.

In our situation, my wife and I are definitely on the same page when it comes to money spending and savings. We had conversations very early in our relationship about various financial budgeting, saving, and spending activities. We always check with each other towards bigger purchases and discuss our future goals to make sure we are both on board. Maybe we do not agree at first, but after hearing the others viewpoint, we always come up with an agreeable solution.

2) Emergency Plans

What happens if either of you loses your job, or worse, loses the ability to perform a job function? It is a good rule of thumb to have a minimum of 6 months worth of savings should something happen. In today’s tough job market, it would probably be smart to have even a larger stockpile of cash should it take longer to find a job.

This savings should be outside of any type of retirement account. How will you and your partner establish this stockpile of cash? The easiest thing to do is set aside a certain portion of your paycheck every pay. Set up an automatic deposit into an account that can be used as only an emergency fund. Or how about that large tax refund you receive every year gets stashed away into savings?

We used to be sitting on a hefty stockpile of cash as both an emergency backup and a down payment towards a home. We saved every penny from our wedding, and every year since we saved our tax refunds. Overtime, it gave us the protection we needed. However, most of it went towards our recent home purchase, which was the plan.

Since we have changed our allocations to start saving more to build our emergency fund back up. Luckily, I also have some “fun money” I invested years ago before I met my wife that can be cashed in at any time in case of an emergency.

3) Level of Debt

Do you know your future or current partners debt history? If there are any aspects of your partners credit history that has not been shared, send up the red flags now? A marriage should include full disclosure of all your spending history, as it could reflect on future habits. In order for anyone to confront debt, they need to be honest about it, not only to their partner, but also their selves.

Prior to marriage, my wife and I honestly discussed all of our financial backgrounds. Luckily, neither of us had really any credit card debt to discuss because we did not carry balances. My wife did have one account that her parents were paying, and had missed a couple of payments. Once it showed up on her credit reports, we quickly worked to get the card paid off immediately and started to work to improve her credit scores.

My wife and I also made an important decision about our school debt prior to marriage. We both agreed that we would share in all bills proportionally; however, we were both responsible for our own school loans. My wife has a large amount of schooling debt due to a required Masters degree, and I recently paid off all of my loans earlier this year. This was an important decision we made jointly that holds each of us responsible for our debts prior to marriage. Even though legally we share the debt, we both felt guilty passing the responsibility onto the other (see step #1 above).

4) Joint or Separate Accounts

One question I hear a lot from engaged couples is how to handle income, and whether to maintain joint or separate accounts. Both of our parents came from the old school thinking of all the money goes into joint accounts, and they spend out of those same accounts. My wife and I each already had our own systems in place prior to meeting each other.

I had always had my mortgage go into an account solely for that purpose. I also used to maintain one account that I paid all of my bills out of, as well as my everyday spending. Over the years though, I learned that it would be more beneficial to have my budgeted bills go into one account, and all of my “fun money” into a separate account. This way there was always money available to cover the bills.

After my wife and I discussed our financial future, and established a budget, we started setting up both joints and separate accounts. We initially had an account created solely for the purpose of saving for our wedding. Once we started living together, after engagement, we expanded my budgeted bill account as a joint account. To this day, we have joint accounts that cover all of our budget needs, as well as savings goals. Whatever is left over we have go into our own separate accounts. With that money we are free to do what we want.

Typically, that separate money goes towards grocery and household items, eating out, gas, and other expenditures. Honestly, there really is not much “fun money” spending because we live within our means, but the system meets our needs. If I feel the need to run to the store to buy myself a stockpile of Amazing Race Snapple, I know I do not have to get my wife’s permission because the money is coming out of my own account.

5) Realistic Budgets

As I briefly discussed in some of the previous steps, a budget has always played a role in my professional career both prior to and during marriage. A budget has become an even more important role now that we maintain multiple properties, and are raising a family. Whether it be short term vacation goals, or the longer term new home or retirement goals, it is important to sit down and honestly take a look at all of the income going in and where it gets spent each month.

When you have everything worked out on paper, you can easily see where items can be addressed to cut spending if need be. A couple than can allocate where the important and not so important items need to be adjusted to meet your goals.

Now that we have met our goal of buying our dream home, we need to sit down and reevaluate what our new goals with be in the future.

6) Sticking to your Budget

Once you have your budget finalized, it is important to not only stick with it, but also reanalyze it periodically as conditions in your life change. Did you all of a sudden pick up a new bill, or paid off a previous debt. Sit down and adjust the budget. Maybe that extra money can now be used towards a new goal.

By easily visualizing your goals, income, and debts, you will keep them in your mind the next time you are debating about going out and buying that new pair of shoes.

7) Estate Planning

Something not everyone likes to think about is what happens when they are no longer around? However, when you are married, and especially after having children, this is a very important part of your portfolio. As I talked about in my post Have You Protected Your Assets and Family, we took the important steps of setting up life insurance policies that not only act to cover the other should something happen, but also as a retirement vehicle. In addition, we finalized our Wills and Power of Attorney documents to make sure our assets and wishes were protected.

A long discussion could be had on estate planning, but this is a definite step that should not be overlooked.

This list is not meant to act to cover all situations to a happy marriage. However, one always hears that finances lead to the most number of divorces. Hopefully, by being honest with your partner, and taking the necessary steps to a smart financial relationship, you can share in a happy relationship.