Creating Money Harmony in Your Marriage

September is the perfect month for pumpkin spice lattes, the return of Target’s Halloween section, and marriage. Traditionally, more couples get married in September than in any other month. June and October take second and third place, respectively.

If wedding bells are on your horizon, you may be caught up in dress adjustments or flower arrangements. While all of these are important and fun decisions to make, I also encourage you to take some time to discuss finances with your soon-to-be spouse. You want to ensure you’re on the same page about budgeting, spending, and investing. These initial money conversations can lay the groundwork for a healthy marriage where both spouses are equal partners in making financial decisions.

Discuss your individual money mindsets. Everyone has unique experiences and perspectives on money, saving, and budgeting. You can avoid quite a few financial disagreements by better understanding how your spouse views money and its purpose. Consider the following four mindsets and have a conversation about which mindset best describes each of you:

• Achievers view financial success as budgeting and saving for specific, tangible goals. Achievers want to feel prepared for their financial futures.
• Balancers want to stick to a budget, maximize their credit card rewards, and use every coupon that they can find. Balancers feel successful when they’ve gotten the best possible deal in each transaction.
• Experiencers view financial success as spending money on the present moment. Experiencers tend to be optimistic about their financial futures.
• Explorers view financial success as saving and budgeting such that they can live comfortably in the future. Explorers are often comfortable making trade offs to enjoy a cushier lifestyle down the line.

Develop a joint budget with individual, discretionary amounts. In the future, you can have your annual budgeting discussion right after the holidays, starting off the New Year with a clear financial plan. For now, consider each of your financial mindsets. Perhaps your partner wants to ensure you’re saving to buy a house, and you want to prioritize spending on an annual vacation. Make sure that your budget accounts for both of your goals, such that you are jointly committed to the plan. Make sure to also budget discretionary funds for each of you. Each spouse will be able to spend their monthly, discretionary funds as they see fit, allowing each of you to each feel independent.

Set up a joint account. This joint account will be used to pay for your major expenses, such as car loans or home repairs. You should set aside time each month to review this account together, and discuss if you’re each adhering to your agreed-upon budget.

Set up or maintain separate bank accounts for your discretionary spending. When you have your budget conversation, you should not only discuss the monthly amount allocated towards each spouse’s discretionary purchases, you should also discuss which purchases will come out of the joint account and which will come out of the discretionary accounts. These discretionary accounts allow spouses with different spending habits or money management styles to enjoy their freedom.

Fund your savings first. At the beginning of each month, put money into a separate savings account, such that you’re prioritizing saving above discretionary spending. Having a separate bank account for your savings helps you avoid spending your savings and helps you more successfully set aside funds for larger, long-term purchases.

Be prepared for emergencies. Calculate how much you live off of each month. Work towards saving 3-6 months worth of those living expenses in the event of an emergency. Doing so will help you and your spouse stay calmer and more connected in the event of a hiccup.

Start investing together. Investing often allows your savings to grow at a much faster rate than money left in bank accounts. This growth rate will make it easier for you and your spouse to save for retirement and for other long-term goals. Before investing, discuss how much money you want to invest. It may be helpful for you to each take a risk assessment in order to better understand how much risk you’re each comfortable assuming. If you have very different risk tolerances, you could set up separate investment accounts with unique investment styles. You could also decide to invest a portion of your funds in lower-risk, lower-growth securities and invest another portion of your funds in higher-risk, higher-growth securities.

The Elm3 team wishes you all the best as you and your spouse set out on your joint financial journey. Along the way, please reach out if you need any assistance with building a financial plan, investing, or reaching your financial goals.