You both said “I do” at the altar, and the honeymoon to Bora Bora was divine, but now it’s time to settle into married life and everything it entails. Couples nights, finishing each other’s sentences, and finances. Ahh, yes–the other F word.
This can go one of two ways: you both have an understanding about finances and build a financially secure future together, or there’s a lack of transparency over money, and it all becomes a bit of a mess.
Hopefully, it’ll be the former, and with our guide on how to do finances when married, you can enjoy your life together as newlyweds and beyond while running a tight–but fun–financial ship.
How to do finances when married
Split the bills… or don’t
Most couples assume they should split the bills when once hitched–and if everyone’s happy with such a scenario, then it’s all good. Splitting everything 50/50 down the middle means you know where you stand, and it’s all equal. It’s not the only option, however.
If one partner earns significantly more than the other, there’s no reason why the higher earner can’t pay slightly more–if it works for all involved. The conversations about bills could be your first true test when it comes to how to do finances when married.
So if you want to pass with flying colors, open a dialogue about what works best. It could be that you split the rent or mortgage right between you, but the spouse who earns more pays a little bit extra for outgoings like utilities.
Open a joint checking account
Are you really married until you’ve opened a joint checking account? We’re not saying that you should share every dime, but if you’re building towards the future, you’ll want to establish joint accounts where you share funds.
Start with a checking account, and combine an element of your finances. It could be for emergencies or something relatively simple like paying for the groceries. Having a joint account will help teach you how to manage finance together and put you on a sound footing for other joint money activities, such as...
And a joint savings account
If you’re opening a checking account together, you might as well look into a joint savings account too. They can be beneficial if you’re planning to manage finances and work towards achieving your money goals together.
Joint savings accounts can provide better financial protection, thanks to the Federal Deposit Insurance Corporation insuring against a higher amount for joint accounts compared to individual ones. For example, the FDIC will insure a joint account for $500,000 and $250,000 for a single account.
But also have your separate accounts
Sharing is caring and all, but it’s good to have your own identity–especially with your finances. That’s why it might be a good idea to share some aspects of your money but leave others to yourself.
Having separate accounts doesn’t mean you don’t trust your spouse to share money. Plus, you can continue managing your money independently and enjoy a form of financial independence. If you’re the more frugal one, for example, you can relax safe in the knowledge that you’re managing your money how you like.
On the other hand, if you like spending your money, you can always agree on a joint monthly amount to put aside for the savings account. Then you get the freedom of spending (responsibly, of course) in a way that suits you with your solo account.
Trust is a fundamental part of being married, and having that faith in each other to manage your own finances can help make the relationship even more secure. Sometimes, it’s great to do things together. But some things can also be done apart, which brings us to...
Get a life insurance policy
Why not protect the ones you love by making sure they aren’t left with financial issues if you unexpectedly pass away? Plus, if you get a permanent life insurance policy, you don’t have to think about death as there are benefits while you’re still alive (more on that in a bit).
But which spouse should get life insurance? You could look at a joint policy, but it may be easier going for two single ones, as they’re more customizable and offer greater control for the policyholder. And if you’re thinking of starting a family–or have one already–permanent life insurance coverage offers protection for the entire crew.
Cash value for perm life insurance
With a perm policy, you can build wealth thanks to the cash-value element. When you pay into your premium, you’re effectively covering two areas: cash value and the death benefit. Both of these grow over time, and you can access the cash you’ve accrued while you’re still alive and use it how you see fit. You may even decide to pay for the kid’s college with your cash accumulation.
Tax-free savings and investments
What’s better than growing wealth through your life insurance policy? Doing it tax-free, that’s what. When you access the cash value in your policy, you can do so via a 0% loan to yourself, and because you can’t pay yourself tax, you get to take the money out tax-free. Then, when you pass away, your increased death benefit pays the loan off, with the rest going to your beneficiaries.
The same premium for your entire life
A permanent life insurance policy also locks in your premiums, so you pay the same monthly figure at 35 as you would 55. And while it may be more expensive than a term policy in the short term, in the long run it’s more valuable because your premium doesn’t change. Whereas a term policy will charge you renewal prices at the age you renew if you decide to extend it.
Start your marriage off by adulting like the rich
Look, you’re married now–it’s time to be an adult and do grown-up things like brunch. But if you’re going to be an adult, you might as well do it like the rich. What do we mean by that? Build your wealth together and protect your financial future, that’s what.
A permanent life insurance policy is a good place to start, as it gives you benefits in both life and death. You can also make other smart investments if you build your wealth, such as investing in real estate and even stocks if you want to try other investment types. It’s all about long-term thinking. Do that, and you’ve got a good chance of building wealth together.
In conclusion: How to do finances when married
Getting your finances right as a married couple can be tricky, but it doesn’t need to be stressful. Transparency and research will go a long way to setting you, your spouse, and the rest of your family up for the future. And the “I do” you said at the altar will be the beginning of a long relationship with financial security. Now that’s how you do finances when married.