People of all ages and life stages get married every year, and have to spend time figuring out what works for their financial plans. These ideas can help.
Marriage has changed a lot in the past few decades.
For starters, fewer people are getting married: The marriage rate has dropped by about 60% since the 1970s. Even so, about two million couples get married every year
If marriage dynamics have changed—older, remarriage, two working partners—what hasn’t changed? Money, both the need to talk about it and to plan for its impact on a marriage.
None of that is easy. It’s so hard that over 4 in 10 adults who are either married or living with a partner are keeping a financial secret.
It would be great if money talks and decisions were cut and dried, all just spreadsheets and dollar signs. Turns out, money is highly emotional: Longstanding research found that 90% of financial decisions are made on emotion alone.
When you’re in a relationship, you bring that money philosophy with you. It can cause conflict if it differs from your partner’s, or you’re unsure how they feel about and deal with money. The best way to tackle that is to talk about it. “Learn from each other what you think about money, and how you make financial decisions,” says Heather Winston, financial professional and product director for retirement income solutions at Principal®.
Those discussions aren’t about determining who is “right” or “wrong.” They’re about making sure you understand each other’s needs and emotions, and the impact on your short- and long-term financial plans. Keep talking, a little at a time, says Winston, until you both feel like you understand your differences and similarities.
Have you made a financial decision, only to regret it? You’re not alone: About 8 out of 10 people do.
Regret (and the financial obligations that come with it) are just part of our money histories and our current financial status. For some, revealing that history stokes anxiety, even fear. But transparency matters when you’re planning a financial future together. “Avoidance won't make money problems go away,” Winston says. “In fact, it could make the situation worse.”
This means revealing what you bring to the marriage, including:
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Assets like bank accounts, investments, real estate, retirement savings, or pensions
- Income, from a job or other sources
- Debt on everything—cars, credit cards, mortgages, student loans (for you or any kids), or personal loans
- Credit scores
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Financial obligations from previous marriages, including child support or alimony
Once you have transparency in your history and current status, you can figure out your approach going forward, your shared goals, and your plans for making those goals a reality. Shared budgets and goals might include saving for retirement, or big events like a vacation. They can help you allocate for housing, transportation, and debt repayment, in amounts that work for both each person, while allowing for independent spending, too. That, of course, takes a shared budget.
Your goals and that budget doesn’t have to be like any other marriage; it’s yours, after all. But both partners have to be aligned. “You’re not just merging your money but also your lifestyles,” Winston says. “Think about how you’ve been managing your money separately. Then talk about what you’ll do differently.”
Your shared budget will work in tandem with however you decide to share money. You might:
- Merge finances 100%, including past savings, new income, inheritances, and debt
- Gradually combine finances by contributing some income to your own accounts, and the rest to shared accounts, adjusting over time as needed
- Maintain separate accounts and income streams, either split evenly or proportionally based on income
- Maintain separate accounts but open a joint checking account to cover shared costs, with each person depositing a fixed or income-proportionate amount monthly
- Maintain separate accounts and name one person the “spender,” who prioritizes where the dollars go, and the other the “saver,” who puts aside all of their net income for long-term goals
Paying bills, checking on insurance, doing taxes: All those money to-dos remain no matter what your shared budget looks like. Now, you’ll have to figure out who is doing what and how both of you stay informed. You’ll probably lean into existing skills and time, too. But mostly what you’ll do is consistently continue the conversations you hopefully started with, so that financial decisions don’t turn into financial secrets. “Initially, it can be difficult to talk about saving and spending. Like any skill, if you do it routinely, it becomes a habit,” Winston says.
Some automatic conversations check-ins may include topics like:
- Big purchases
- A change in cash flow—good or bad
- Major life events
The what-ifs are hard to talk about, too, but they need their own conversations—not just retirement planning but taxes and insurance, too. The end goal is protection for both you and your partner. “These types of conversations aren’t necessarily fun,” Winston says, “But thinking about how you’ll manage if something happens to one of you should be part of the mix.”
Work through the following list:
- Beneficiary designations of all your accounts. This includes 401(k) plans.
- Estate plans. Documents may be a will, power of attorney, and health care directive.
- Insurance, including life, disability, health, and dental insurance. One person’s options through work may be a better fit for your joint needs.
- Long-term care insurance. Once you marry, you’re responsible for your spouse’s medical debts. Medicare doesn’t cover most nursing home care, and a married couple’s combined assets are counted when determining eligibility for Medicaid.
- Retirement plans. These will help you start to plan future financial goals.
- Taxes. Talk to your tax advisor about the implications of filing individually or jointly
Are you and your spouse saving enough to make your retirement goals a reality? A check in with a financial professional can help. You’ll probably need to bring current savings and contribution rates to any discussions. For your Principal account, you can find that by logging in to principal.com or on the Principal app.
