Tips on how to manage your money in a marriage
Greetings! Today, we have a guest post from Kimberla Lawson Roby, author of The Best of Everything, a novel about a woman and her cash. I’m still holding it down for the single ladies, but if I were to get married, I would like to make sound financial decisions with my hubby. Romance with bad finance doesn’t have a chance! Heheh!
Here are Roby’s tips on marriage and money:
1. For soon-to-be married couples, be honest with one another before getting married about your financial history and any current debt you owe. This way, you’ll enter the marriage with full disclosure, as opposed to being caught off guard, and perhaps even position yourselves to tackle the debt together.
2. Treat all financial debt and responsibility as if it belongs to both of you. For example, if you owe $10,000 in bills and your husband owes $10,000 as well, then come to an agreement that together you now owe $20,000.
3. Open a joint checking account and have all income, yours and his, directly deposited into it. This means that regardless of whether you earn more or he earns more, you both share all income equally.
4. Once a monthly budget has been created, determine how much money you will save together: i.e., how much you will each add weekly, bi-weekly or monthly into your individual retirement accounts, how much you will save in a joint savings account, etc.
5. Determine how much spending money you will be able to withdraw and deposit into your own separate checking or savings accounts and make sure that whatever that amount ends up being, you will each take 50% of it.
6. Discuss all financial decisions before taking any action and more than anything, remember that this is no longer about just you but instead, it is about the two of you who have made the decision to become one.
What do you think about Roby’s tips? Is it harder to manage your money as a single person or a married person? It’s a big step to only have a joint account like Roby suggests.
13 Responses to Tips on how to manage your money in a marriage
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I think Roby’s tips are good in general. However, regarding #1, people should know this information before even getting engaged. There were many couples in our premarital class who got an unpleasant surprise when it came to the other person’s finances.
For #3 and #5, I think the details are much less important than agreeing to a plan of action.
I think it’s harder to manage money as a couple but only marginally. The fundamentals are the same but there are another person’s transactions and accounts to track. For example, for retirement savings, I have to look at the overall asset allocation of ALL our accounts (two 401ks, five IRAs and one taxable acct).
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I agree with the general principles but not all of the specifics. Every couple’s situation is different and one-size-fits-all advice will not work in all cases. I do agree with #1. The more time couples spend before they get married talking about their short- and long-range goals, including financial goals, the less likely there are to be unpleasant surprises during the marriage, after the glow of love begins to wear off.
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I agree with both Carolyn and Roby – you have to be flexible in how you address debt and savings, especially as a couple.
The most important thing is that you work as a team, because you’re together for life!
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I like the tips, except I don’t think that all money should be deposited into a joint account
Maybe it worked better for me, but my DH and I decided how much and when what needed to be paid, and that’s what got deposited into the joint account.
So we each have $$ direct deposited into our own accounts and move a set amount into joint, and then ALL bills( rent, utilities, savings) come auto-paid from the joint. Whatever was left in our individual accounts was ours to do with as we pleased.
It works out great.
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Joint accounts is a big step, but then again, so is marriage. I’ll be happy to toss everything into one pot if I can find a great guy who has similar financial goals & discipline.
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Savvy: Sounds fair.
Carolyn: Agreed.
PJD: Yay.
GLM: For life?!! That’s long, but that’s the plan, right?
Jeanine: I’m glad it works for you. Does your spouse tell you when he gets a raise?
Coco: Yes, it all depends on his financial resume.
Rachel: I’ll check you out!
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I’m a Suze Orman disciple and she would say NO NO NO to #3. Suze says figure out your combined monthly living costs and add 10% to that because we tend to underestimate. Add up your combined monthly take home pay. Divide your expenses by your take home pay to figure out the percentage of those expenses that each of you are to pay.
Example with numbers:
1. Combined living costs of $3000
2. You bring home $1500 and he brings home $2500…so you have total combined income of $4000
3. Divide your total income by your monthly living costs. In this example divide 3000 by 4000. That equals 75%.
4. Multiply each of your individual take home pay by 75% and that is what each of you should contribute. So in this example 75% of 1500 is $1125 and 75% of $2500 is $1875.
Based on this way of calculating you each have contributed your “share” into the household account.
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@TIffany: Indeed, that’s truly an equitable way to figure out home expenses. I wonder if it’s hard to put into practice in real life?
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@ Tiffany – That sounds more like roommates than life partners. There is no fair “share” because all money that comes into the household is OURS regardless of whose name is on the check.
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I’m sure he would if he ever got one…..his type of job, he’s “topped-out”, meaning if he stays there another 20 years, he’s made the most that he’s going to make as an hourly employee.
Regardless though, we have a communication established that we talk about such things, and make such desicions together. And I think that is the main thing that is lacking in most marriages….about money, goals, child-rearing.
Better to talk about it before hand and know where your other half stands on issues BEFORE saying I do….we didn’t, and it wasn’t easy for us the first 5 years.
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I like your ideas on how a new couple can come together regarding thier finances. But, I beleive that if each person had financal problems prior to the marriage they should each handle them separately. Only the finances they create together is what they should be working on together to bring them down.
savvy