Money and marriage: 6 tips for a financially happy marriage

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Marriage is also a financial agreement
When you married, you agreed to share a financial future too. Here's how keeping an open dialogue can help you save, invest and plan together.

Key points

  • When combining finances after marriage, being open with your spouse about what you earn, spend and owe can help you plan for the future together
  • Talking with your partner about your goals, and deciding which ones are most important, will enable you to come up with a budget and a financial strategy that makes sense for both of you
  • Agreeing on how much risk you're comfortable with as a couple is an important first step in building an investment portfolio that won't keep you up at night
  • Get the checklist: Moving In Together
Money. It's a hot-button issue for most couples. Although successfully managing finances in marriage is essential to your happiness together, talking about it may not come naturally. No worries, though. If you haven't gotten around to discussing the role money plays in your life together, it's not too late to start.
Here are six money-and-marriage tips that could help you get closer to your financial happily-ever-after.

1. Keep sharing your financial secrets

Discuss your financial situation with your partner
Have you traded financial statements with your partner? That means sharing everything from your income to your debts. Begin by tallying up what each of you owns — and owes. Your assets should include things like your savings and retirement accounts. Your liabilities may include student debt, a car or business loan, credit card balances and even mortgages.
Why is this important? "When you marry someone, you're combining your assets, but that also means you may be taking on each other's debts," says Debra Greenberg, director, IRA Product Management, Bank of America Merrill Lynch. You may want to help pay down your partner's debt more quickly. But even if you can't, it's better to not be surprised by something that could have an impact on your finances as a couple (one low credit score, for example, could become a roadblock if you apply jointly for a mortgage).
When you marry someone, you're combining your assets, but that also means you may be taking on each other's debts.
— Debra Greenberg,
Director, IRA Product Management,
Bank of America Merrill Lynch
After everything's on the table, start talking about where the two of you want to go from here. Here are some questions to consider:
  • Are you happy with the home you're living in?
  • Are either (or both) of you planning on continuing your education?
  • Will you be paying or helping to pay the education costs of your own children, younger siblings or nieces and nephews?
  • Do you have enough insurance to provide a financial safety net should something happen to one of you?
  • Whose health care and other work benefits better serve both of you?
  • Do either of you expect to help support your parents financially as they age?
  • Do you have similar aspirations for the kind of retirement you want?

2. Embrace a budget

Budget all of your expenses as a married couple
Figure out how you have been managing costs, from ramen noodles to retirement. Even if you both work, you may not want to divide the bills down the middle. "If you have the higher salary, you might take full responsibility for the housing costs, and your spouse could cover the other monthly expenses. You might also contribute a larger percentage of your income to your retirement fund," says Greenberg. "Both of you, however, should try to contribute the maximum to your retirement accounts to make sure you receive any matching benefits offered by your employer."
When it comes to managing your daily finances (PDF link), talk about what makes you both comfortable. Some couples find joint bank accounts are the easiest to manage. But maybe you as a couple will decide to keep individual accounts — and dually contribute to a joint account to save for larger purchases.
To help you keep track of your spending, income and net worth, you could look into any number of budget-tracking programs or apps, such as our Cash Flow Calculator.

3. Explore your compatibility — as investors

Are your attitudes towards money and finances compatible?
Your attitudes about money and investing may differ in key ways — and you may need some help sorting things out as you plan for your future. Maybe you're willing to take on some risk for the potential of a higher return, but your spouse prefers to stick with a slow and steady approach. That's okay — your different financial styles may even complement one another. You just need to be up front about it and think about how the investing decisions you make today could affect your financial security later.
For those who aren't quite sure about the level of risk they're comfortable with and how that relates to different kinds of investments, Merrill Edge offers online Investor Education. There you'll find articles, videos and tutorials geared to different levels of knowledge, on topics such as investing and markets, mutual funds and other investment products.
From time to time, it makes sense to take a fresh look at your financial situation and goals. You'll probably want to make a few changes along the way.
— Debra Greenberg,
Director, IRA Product Management,
Bank of America Merrill Lynch
Keep in mind that, whether as a couple or as individuals, you may not always make the right decisions about money or investments. That's part of the learning process. When mistakes happen, learn from them; refrain from blaming yourself or your partner; and move on.

4. Talk with a professional about tax differences for couples

Be sure you understand how filing taxes jointly could affect your finances
Find out the ways in which filing taxes jointly could affect your finances. Since taxes can be a little more complicated for married people, you may want to watch the Khan Academy video from Better Money Habits, "The Marriage Penalty," for an explanation of how tax rates can change when you tie the knot. Make time to talk with a tax professional about different filing options and how they may affect your tax picture. It might also be a good idea to review your investment choices and find out if there are any tax-efficient steps you might consider taking.

5. Update your will and other legal documents

Document your wishes for your estate and heirs
This is always a smart thing to do — and it isn't complicated. If your intent is to have your spouse as your beneficiary, you'll want to communicate your estate wishes and be sure they're reflected in your will and other key legal or financial documents, including insurance policies and retirement accounts. And it's a good idea to review all of these documents every year or so — or more often if there's been a change in your circumstances — to see if revisions are needed and to inform beneficiaries of any changes.

6. Review and recommit, yearly

Review your marital finances yearly
Nothing's set in stone. "All the plans you make can be quickly upended by new jobs, new expenses and new babies," says Greenberg. "From time to time, it makes sense to take a fresh look at your financial situation and goals. You'll probably want to make a few changes along the way."
Think about making this an annual exercise, Greenberg suggests. "Whether you choose to do it at the same time each year — say, the first week in September — or at certain financial milestones, like when your 401(k) or IRA balance increases by a certain amount, it's valuable to put your heads together and review the financial state of your union."
Then, when you take joy in the life you've built together, you can celebrate your financial accomplishments as well as your marriage.
Next steps

Asset allocation does not ensure a profit or protect against loss in declining markets.

Keep in mind that dollar cost averaging cannot guarantee a profit or prevent a loss in declining markets. Since such an investment plan involves continual investment in securities regardless of fluctuating price levels, you should consider your willingness to continue purchasing during periods of high or low price levels.

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