How to navigate the first year of marriage when it comes to money
Once you tie the knot, there are a number of things you and your spouse will need to take care of in your first year of marriage—including merging both your families and your finances.
Read on for tips from Ally Bank’s Head of Money Wellness, Jack Howard, on how to have those difficult discussions right off the bat for success in the years ahead.
Even before tying the knot, Howard suggests discussing potentially thorny topics including your relationship to money, whether you want kids and when and where you hope to retire. “Then, as you move forward, ensure that your financial goals align with those values,” she says. Discussing these matters now, rather than putting them off to avoid a potential conflict, will help you build a strong foundation for a successful marriage.
Howard encourages couples to delve deep into each topic. For instance, when it comes to children, the conversation should transcend whether or not to have them. Talk about your own upbringings and how you want to raise your children—and also discuss the financial implications of having kids, from diapers and daycare to college and a first car.
When having these conversations, Howard says it’s important to practice skills such as active listening and mirroring. “You hear what your partner has to say, repeat it back to them, and ask if you heard it correctly. Then, offer your point-of-view,” she says.
Dividing chores
While around 70% of couples live together before marriage today, cohabitating can be an adjustment for many newlyweds. It’s important to understand each other’s habits and schedules, and to establish collaborative routines.
When it comes to household chores, for example, have an open conversation around what feels like an equitable division of labor. Start by making a list of daily and weekly chores. Then, volunteer to take on any that you genuinely enjoy doing. For instance, if you love to cook, agree to meal-prep duty a certain number of nights a week—if your spouse handles the clean-up. When it comes to tasks neither of you raise a hand for (i.e., scrubbing the toilet bowl), trade off weekly so it feels fair. The benefits of dividing and conquering both small and large household tasks include becoming skilled in the art of compromise—which is what marriage is all about.
Celebrating holidays
Another important first-year discussion: where and how you plan to celebrate the holidays. Deciding where to spend Thanksgiving, for example, can be a tricky subject to approach if your families can’t come together in one place. For instance, if money is tight and your parents live out-of-state while your partner’s are local, you may consider celebrating with his family this year and starting a Savings Bucket, a feature of an Ally Bank Savings Account, to fund next year’s flights.
“If you have the ability to save for travel expenses over time, whether for the holidays or a vacation you dream of taking together, then it should definitely be factored into a spending plan that you create together,” says Howard. A great way to set money aside without feeling the pinch is to open a dedicated savings account and direct deposit a small amount, such as $100 from each paycheck, into it. If you both do that, you’ll have $2,400 saved by the end of the year.
Another great compromise? Host both families for the holidays, even if it means borrowing some folding tables and chairs to accommodate them. This will provide a great opportunity for your family members to get to know each other—and you both as a couple—better.
Combining finances
Howard emphasizes the importance of discussing your financial situation—warts and all—with your partner. This includes any credit card debt or student loans, your credit score, and any savings and assets, so you can have a complete picture of where you stand financially as you merge your lives, and bank accounts.
On that note, does it make sense to create joint checking and savings accounts? Howard cites a recent study that found couples with joint accounts have higher satisfaction in marriage long-term due to transparency. “You’re able to catch disagreements around spending earlier and you tend to have a ‘we’ perspective around money rather than a ‘me’ perspective,” she explains.
On the flip side, also keeping individual bank accounts can afford you a level of financial independence. However, it’s important that your partner is aware of these accounts. “I'm a big fan of honesty,” Howard says. “From the outset, discuss ways each partner can spend on things they want without feeling that they're going to be judged or have any shame about it.”
Her advice: Make a monthly spending plan that includes a certain amount for fixed expenses, a certain amount for saving and investing, and an agreed-upon amount that you can spend on clothes, dinners out and other small indulgences.
How much each spouse contributes to those expenses should depend on income. “Splitting 50/50 is nice, but for most people, it’s not a reality,” she says. Agree on a split with which both parties are comfortable.
Every couple’s financial plan will depend on their unique circumstances and goals. The key is to keep having financial discussions, both with your planner and with each other. “Schedule a time every month to talk about any emotions that arise in regard to money, things that scare you, and any new savings goals,” Howard suggests. “Having these honest discussions regularly at the outset of your marriage will help set a positive tone for the rest of your lives together.”
