Congratulations — you just tied the knot, and now it’s time to combine finances with your new spouse. However, you are not quite sure how to do it. How do you readjust when you have suddenly become one-half of a team?
The issue can be challenging, especially if you are in the habit of managing your own money, paying your own bills and coping with your own spending habits.
Here are three questions you and your new spouse should ask and discuss.
Who is in charge?
You both have an equal say in all financial decisions, and no big choices should be made without consulting each other. Still, you should designate one person to be the household money manager.
Why? Unless you are each paying for separate bills, putting one person in charge of collecting and paying bills eliminates any potential confusion — and the missed payments and late fees it can cause.
The money manager should also regularly monitor your spending to make sure you are staying on track with your budget.
What is the budget?
For combined finances to work, you need to each be on board when it comes to both fixed expenses (phone bill, insurance, utilities, etc.) and variable expenses (groceries, entertainment, “fun money”).
Without an agreed-upon budget, day-to-day expenses can create big arguments. Having a benchmark to gauge your spending makes it much easier to make decisions like whether or not to go out to eat for a second time this week.
Plus, a budget is a good point of entry for discussing the overall lifestyle you both would like to maintain.
What are your big goals?
Beyond simply paying the day-to-day bills, you need to be on the same page when it comes to your long-term financial goals as a couple. So, ask the following:
- What are your savings goals?
- How much will you allocate toward savings each month?
- How will you start planning for retirement?
- If you have any debt, how aggressive will you be toward paying it off, and not incurring any more?
If your long-term goals are not in alignment, short-term decisions like what to do with your latest tax refund or your holiday bonus can be more stressful than they need to be.
Paula Pant helps people ditch the cubicle and live on their own terms. She’s traveled to 30 countries, owns six rental property units and hasn’t had an employer since 2008. Her blog, “Afford Anything,” is the gathering point for a tribe that refuses to say “I can’t afford it.” Follow Paula on Twitter: @AffordAnything.