Ours: A Financial Conversation Guide for Newlyweds

If you are a newly wedded couple seeking the ideal balance between “yours”, “mine” and “ours”, this article will be a great resource and guide to framing and having those conversations.

Communication and your first financial conversation as newlyweds

Consciously making the time and effort to communicate about finances with each other will be one of the most influential actions affecting your overall experience discussing finances. The conversations must be ongoing as your goals and financial situation change. It’s important to acknowledge that no decisions are set in stone and you can always adjust if something isn’t working for one of you. It will take many conversations for you to find the financial communication cadence that works best and you will likely tweak your approach over time.

My wife, Krystie, and I sit down together once a quarter to review our finances. These conversations are focused on both the numbers and how we feel our current structure is working for us.

Questions to ask and topics to cover:

• What should we bring to our first financial conversation together as newlyweds?
• List of all asset values (checking/savings accounts, brokerage accounts, IRAs and 401(k)s, etc.)
• List of all debt values and interest rates
• Monthly income
• Monthly fixed expenses (mortgage/rent, car payment, etc.)
• Monthly amounts being directed to savings and investments
• What are our combined investment and savings figures? What are our combined expense figures?
• Seek to understand where you are today and transparently share your complete financial situations with each other as a starting point.
• Use the 50/30/20 rule as a guideline for your combined financial numbers where: 50% of income is allocated to “needs” and fixed expenses, 30% is allocated to “wants” and fun spending, 20% is allocated to investments and savings.
• What are our initial impressions of our combined financial figures today?
• What are our short and long-term financial goals?
• What changes do we need to make to both feel comfortable on the path to those goals?
• When should we talk next to continue our financial conversation? How regularly should we discuss finances in the future?

Structure of Your Financial Situation

What is your ideal balance between “yours”, “mine” and “ours”?

When we first combined our finances, Krystie and I directed a percentage of our take-home pay to our individual checking accounts to maintain some independence. As we both became more comfortable, that percentage shrunk over time. We now direct all take-home pay to our joint checking account, which we find easier from an administrative and tracking perspective.

Questions to ask and topics to cover:

• Should we combine accounts, keep them separate, or have some joint and some separate?
• If we elect some joint and some separate, which account(s) will our income be directed to?
• Should we start contributing to a new savings or investment account that is owned jointly?
• How should we pay for shared expenses? How should we pay for individual expenses?
• What employer benefits do we have available and how can we take full advantage of the tools at our disposal?
• What are our options for medical coverage?
• What if one person has a more attractive retirement plan offering than the other? Would we be comfortable prioritizing investments to that account that is owned individually?
• Who will play what role in overseeing our financial situation? Who will be responsible for paying what bills? Will we sit down together to review or have one of us handle them?
• How and when should we revisit our arrangement? How will we know if the structure isn’t working for us?
• Would we want to change anything if our incomes change? What if we start off at different income levels but then those amounts begin to converge? Or, vice versa. What if we begin at similar salaries and one of us experiences a dip in pay? What if one of us stops working temporarily or is laid off? How would we handle?

Research cited in this WSJ article suggests there is a correlation between combining accounts and reported happiness in relationships. There are also administrative benefits of combining accounts and simplifying your financial situation.

Financial Best Practices for Newlyweds

Marriage presents a new reason to do some financial housekeeping and ensure your situation and documents in place are reflective of your wishes.

Questions to ask and topics to cover:

• Do we have basic estate documents in place? Who would serve in decision making roles from a medical and financial perspective if something were to happen to one of us?
• Who are the current beneficiaries of our retirement accounts? Do these designations need to be updated to name each other?
• For cash and brokerage accounts, do we have a payable on death or transfer on death designation included? (Adding one will allow you to name your spouse as beneficiary and avoid probate.)
• Do both of us know all of our accounts that exist, how to access them and who to contact? This article details pertinent information you should keep in a safe place that you both have access to.

While marriage prompts conversations related to merging finances, you certainly don’t need to wait until after the wedding to begin having these chats with your significant other. There’s no time like the present.

Should you or a loved one have any questions about your evolving financial situation, please do not hesitate to contact a Modera advisor. It is our pleasure to help.