Newlywed Finances: Things to Consider

Love is blind. Too bad finances have 20-20 vision.

As you strike out on your own, chances are good you’ll meet someone with whom you want to spend the rest of your life. It’s love, many times followed by marriage. And it’s a sure thing it will include finances—yours, his/hers and the combination thereof.

Will you take this man (and his credit card debt) to be your husband? Will you take this woman (and her poor credit rating) to be your wife? Be aware that the rosy hue of love can sometimes blur the reality of finance and the role it plays in a marriage.

Money is often sited as a major reason for strife within a relationship, that’s why it’s so important that a couple places all their financial cards on the table up front and makes as much commitment to their finances as they do their love.

Here are a few things for couples to consider when combining finance and love:
Talk the talk—before sharing a home, you should first share your financial history. Be brutally honest to avoid any unpleasant surprises later. Discuss your financial past and any rough spots. Talk about nitty-gritty of salary, debt, credit scores, spousal support, child support and any other areas relevant to personal finance. Also, compare your two financial habits. Are you a spender or a saver? What are you goals? Because one person is often better with money than the other, decide who will pay the bills. Now’s the time to discuss all these areas and pave the way for a smooth financial future.

Cash flow—once you’ve got a grip on where the two of you stand financially, get down to the business of creating a budget. Where will your money go each month? It’s important to live within your means. As a benchmark, many feel it’s best to live off of 70% of your income and save the other 30%. Your budget should include setting aside savings on a regular basis to have an emergency fund that covers unexpected expenses. Meeting your goals will be much easier if you live within a planned, realistic budget.

United you stand—when it comes to your accounts, you’ll have to decide if you want to keep them separate or join them, or both. You can both keep separate accounts for personal spending and open a joint account for paying common bills like the mortgage, utilities, etc. Decide which works best for your circumstance.

Card counting—some experts suggest keeping separate credit cards, or stay separate on loans in general, to maintain your own, individual credit history. But, you may both need to apply jointly to qualify for certain loans, or may simply want to be joint accountholders as a matter of principle. Just be aware of the price of love gone bad.

Elimination derby—if you carry any debt as a couple (credit card, student loans, etc.), your main objective should be to pay it down as quickly as possible. Start with the debt with the highest interest rate. When that’s paid off, move to the debt with the next highest rate.

Weekend update—nothing stays the same. New jobs, a new home, a child…circumstances change, and so will your financial picture. That’s why it’s important to revisit your financial status at least once a year. Pick a weekend to put aside distractions for a few hours and chart what’s changed in your lives. Make the proper adjustments to your budget and goals.

As you settle into a post-honeymoon comfort zone, it’s important to realize that finances will play a big role in the level of that comfort. Making realistic, responsible decisions about your finances will go a long way to extending the honeymoon.