Getting married changes your life in so many ways, especially when it comes to your finances. After creating a savings plan for your wedding, you also have to sit down with your partner and discuss your future financial situation. This guide explains what you need to know about marriage and money to guarantee a productive conversation that gets your marriage started on the best financial terms possible.
1. Your Credit Scores Are Crucial
Marriage doesn’t affect your credit score, but applying for joint car loans or mortgages will require good credit history from both parties. Buying your dream house or upgrading to a minivan before starting a family could become impossible if one person’s credit score prevents you from accessing necessary loans. Come up with a plan to improve your credit score if you plan on opening accounts or borrowing money.
2. Your Financial Plans Should Merge
Talk with your fiancé or spouse about your priorities. What do you want to do after your wedding? Many people want to buy a home, have kids or start saving for their child’s future college fund. You might have to take care of elderly parents in the next few years or create a retirement plan.
Discuss your preferences for saving and spending money based on your independent monthly budgets. Merging your financial plans will result in shared budget expectations that make it easier to accomplish what you want with your income or savings accounts.
3. Your Accounts Should Stay Separate
Sometimes newly married couples merge their checking accounts, but that’s not necessary. Many financial advisors recommend keeping separate accounts in case your marriage doesn’t work out. If you separate or file for divorce, dividing your shared savings and splitting the account can turn ugly if your relationship is tense.
You can change your last name with your bank after your wedding, but keep your money separate to make life easier. You’ll still share your agreed-upon financial goals and can contribute equally to your savings, even if only one person has their name on the account.
4. Your Taxes May Change
Filing your taxes every year will change after your wedding. Instead of filing as an individual, you’ll combine your financial records to file jointly. It’s a helpful step because you’ll gain new deductions and tax credits, but talk with your accountant before filing. If you’re an independent contractor or business owner, filing jointly could reduce significant itemized deductions that would otherwise decrease your tax bill.
Your accountant will clarify which filing method is best for your situation. Talk with them before the annual April 15 deadline to organize what you need before tax season ends.
5. Your Financial Life Can Cause Stress
Shared financial goals carry more risk. You have to equally want the planned outcome and commit to your plan to get there. If one person in a marriage deviates from that plan or doesn’t consider it important, the financial disagreements will strain your marriage in new ways. If overspending or budget abuse causes tension, plan to talk with a counselor or financial advisor to determine a better plan that works for everyone.
Learn More About Marriage and Money
Consider your relationship and life goals now that you’ve read what you need to know about marriage and money. Working together to save money, stick with a budget and strategically plan your new accounts and tax bills will help avoid the financial strain that makes married life much more difficult.