Newlyweds: Start Your Marriage with a Healthy Financial Mindset

I was recently asked what advice I would give to newlyweds on what they needed to be thinking about as they merged their financial lives.

I found myself reflecting on 30+years as a financial planner working with couples and 30+ years of my own marriage.

What would my advice be? I boiled it down to two principal pieces of advice – one touchy-feely and one practical.

Emotional Advice First

The first one relates to the fact that money is an emotionally charged topic. It might be said that as we get older, we look back and realize how early experiences influence us. And when it comes to money, these experiences aren’t always shared.

My first advice is simply to discuss money openly. I would start by talking about the past. Tell a “money story” that describes a defining moment for you. Describe what your family’s approach to money was when you were growing up. How did your parent(s) talk about (or not talk about) money? What messages did you get? What messages did you incorporate into your thinking and what messages did you reject? Are there things about money that make you uncomfortable? What are you satisfied with in your financial life and what would you like to improve?

The idea is to start with a discussion that isn’t judgmental and is more descriptive.

As you become more comfortable, move towards talking about the future. What goals do you have? Where do you want to be in the future? What are your financial values?

Kathleen Burns Kingsbury in her book How to Give Financial Advice to Couples speaks about the need for couples to “reconcile” their approaches to money. I interpret this to say that you don’t have to have the exact same approach—you can each be different. However, you have to understand and acknowledge each other’s approach and find a way to work together and (hopefully) respect and complement each other.

Practical Advice

My second piece of advice is that you need to recognize that you are not only forming a romantic, family union- you are also forming an economic union. You can resist this notion, as some couples do by keeping their finances separate, but my advice is not to resist it too much. From a tax standpoint, the government views your marriage as a tax union and trying to fight this is fruitless and leads to less than optimal results.

Please don’t interpret my advice to mean that you should own everything jointly. There are good reasons to keep separate accounts—inheritances, pre-marriage assets, trusts, etc. This will depend on your individual circumstances.

My advice is that you need to coordinate your efforts. We’ve seen couples where one works for a company with a great 401k, and other doesn’t have a good one. To optimize their savings, we would have the spouse with the better 401k oversave, and the other undersave from their paycheck.

In an extreme example, one client couple had kept their finances separate so long that in retirement one was saving and the other was withdrawing from an IRA, which created more taxes. I instructed the saving spouse to “pay” the withdrawing spouse, and cut the government’s take in the process.

One final suggestion is to designate one month a year – “financial planning month”. Typically, one spouse may be the “lead” on finances. That spouse should make a point share regularly with the other spouse. In this month, you inventory all your assets and income and look at your savings and spending. Create a spreadsheet or use an app, but keep a copy. Review your insurance, look at your tax return. Set savings goals. Ask yourselves how you are going to make it happen. One year later, repeat the process. How does your financial situation compare to a year earlier? Do you feel good about what you achieved? Are you on-track? What put you off-track?

If you work together, and communicate with respect, you’ll have a greater likelihood of succeeding in both your marriage and your financial life.

Robin Sherwood, CFP®

With over twenty years of experience, Robin assists clients in maximizing their financial well-being. She counsels clients in the areas of retirement, taxes, investments and estate planning.

Robin is a CERTIFIED FINANCIAL PLANNER™ practitioner and a registered member of NAPFA. She has an MBA in Finance from the Wharton School at the University of Pennsylvania, and a BA from Colby College.