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Marriage & Finances: Will You Merge Your Money After Saying 'I Do'?

Personal Finance
bride and groom smile at each other as they walk down the aisle and reflect on marriage and finances

People really don't like to talk about money. Asking someone how much they make is considered a social blunder. Talking about how much money you make seems boastful. And discussing debt is such a cringeworthy conversation that most people would do almost anything to avoid it.

Money is personal, but so is marriage. And when it comes time to tie the knot, it's important to discuss how (and if) you will link your finances together. So, if you're newly married — or plan to head down the aisle soon — here's how to navigate this part of your marriage and finances.

Merging Lives & Money

One of the most important conversations to have before you get married is how you and your spouse will organize your finances. You may vow to love, honor and cherish each other until death do you part, but that doesn't mean it's wrong to keep your money separate.

Consider having a discussion now to decide whether you'd like to open one catchall account for all your earnings, a joint account meant solely for household expenses or separate accounts. You could sit down and have a financial meeting, or you might talk to a financial planner about the advantages and disadvantages of each option.

Part of this will come down to preferences and spending habits, so it might be best to choose an option that's least likely to lead to miscommunication or arguments later on.

What About Taxes?

The tax man cometh every year, and getting married will affect your filing status. You'll have to decide whether it's better from a tax savings perspective to file jointly or with a "married filing separately" status. Couples who file jointly get a standard deduction of $12,700, according to the Internal Revenue Service (IRS) while married couples who file separately get a deduction of $6,350.

Some considerations before you decide on your filing status might include whether filing jointly puts you in a higher income tax bracket and whether filing separately will eliminate some deductions you and your spouse would be otherwise eligible for as a married couple.

Budgeting for Newlyweds

Budgeting is part art, part science — and there are tons of options out there for doing it. You could use an app, a spreadsheet or even a paper ledger. The method you choose is less important than how you decide to allocate your spending.

As a married couple, you might be able to save money by consolidating your cell phone and car insurance into a family account. It could also be worth taking the time to look at every line item in your budget and prioritize the important ones.

Will a premium cable package keep the peace? Can you afford it? How about car and student loan payments? Is there wiggle room in your budget to pay more than just the minimum (so you can get rid of the debt sooner and save on interest payments)?

Try listing every expense you have. This list should give you an idea of whether your income is enough to cover these bills while allowing you to build long-term savings and an emergency fund.

Setting Financial Goals

You likely had your own financial habits and attitudes about money before you got married. Chances are these won't automatically change just because you combine households with someone else.

Your spouse is no different. Mixing all these things could lead to tough money discussions if you're not both on the same page about your financial priorities. Every family has short- and long-term financial goals, but it can be helpful if you and your spouse make sure your visions are aligned from the start.

Sit down for a serious conversation about how much you both earn and how much debt you have, whether it's credit card debt, consumer debt or student loans. If you went to grad school and now have five or six figures in student loan debt, you might want to discuss this with your spouse before getting married. He or she might think you have the money to live a particular lifestyle, pay for the wedding without help from your parents, go on a lavish honeymoon, buy a home or have a child soon after you get married. But such expenditures might not be feasible right away if you're already weighed down financially.

Consider discussing how you'll pay down any debt, as well as your timeline for big financial goals like buying a house or having a certain amount saved for retirement.

When it comes to marriage and finances, transparency is everything. Money conversations shouldn't take place after you get married — they should ideally happen before you say "I do." You're merging a life with someone else, after all, and that also extends to your money. So, think about taking the time to discuss money matters openly and honestly before the big day.

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Information provided is general and educational in nature. It is not intended to be, and should not be construed as, legal or tax advice. Western & Southern Financial Group and its member companies (“the Company”) does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.