Finances for Married Couples

Financial issues are some of the most difficult problems that face married couples. Sharing finances presents new challenges in finding an organizational system that works for both you and your spouse. Usually at the time of the marriage the two parties involved have different levels of security, different expenses, and different levels of liability. Building a budget and properly organizing your finances can help avoid difficult situations.

It is important to have clear and open communication. Calculating your net worth is a good place to start. To determine your net worth, first add up all your assets. This is everything from a car, property, cash in the bank, stocks, and so on. Then add up all of your liabilities. This includes loans, credit card debt, mortgage debt, etc. By subtracting your liabilities from your assets, you will have calculated your net worth.

Your net worth is particularly valuable in planning for the future. If you have a negative net worth after subtracting out all of your liabilities, it is important to use this information to plan for your future. Your net worth also helps you plan for the future by allowing you to see how much money you will have when you have paid off all your liabilities, and also how much you would have if you sold your assets.

From calculating your current net value, you can then begin to set both short-term and long term financial goals. By determining what you both want (from saving for a family trip to purchasing a house or paying for your children's college education) you can then establish what is most important on this list and what you need to do to obtain these goals. Planning for the future is about figuring out what you want and how to get it. It may be most advantageous for you and your spouse to seek out professional financial planning to help you determine how to realize your goals.

Aside from setting financial goals, creating a monthly budget that you and your spouse can live on is essential to managing your finances. This budget should include all sources of income and all expenses. Just in preparing your budget, you will be able to determine what you can afford and what expenses you will need to cut. By having a budget you will be able to monitor your own spending and make sure that you will not put yourself into spiraling debt. Make sure that you include everything, forgetting even small expenses can certainly add up to big problems! Make sure that you consult your budget regularly, just to make sure that you are staying within your financial boundaries. It is valuable to also prepare a yearly budget to help plan for your long-term finances. This will also help you evaluate the accuracy of your monthly budget.

One decision that newly married couples face is whether or not to get mutual bank accounts. One advantage to have mutual bank accounts is that all of your spending records will be consolidated and easier to keep track of. Another advantage is that both of you will have easy access to all of your funds. This, however, can be a disadvantage if you and your spouse split and someone decides to clean out the funds! Another disadvantage is that it is much more difficult to keep a regular tab on your balances when multiple people are writing checks, withdrawing and depositing funds, and so on. Ultimately, this is a decision of personal preference depending on the couple.

When it comes to joint credit, the decision is a little more complex. Joint credit means that both parties share any debt equally. This means if you add on to your spouse's credit account you will share all of the debt they had previously incurred, which also means your own credit record will be altered. Also, if you and your spouse separate, your debts on loans or in other areas will be shared by both parties.

Keeping separate credit, however, is not a foolproof way to assure that you will not be responsible for your partner's debt. In some states your spouse can prove that the debt was incurred due to family expenses, in which case you are responsible for half the debt. Property, as well, can be determined mutually owned, even if it is under your spouse's credit.

When in comes to planning for the future, it is easy to put off considering your mutual retirement plans. If you and your spouse both have retirement plans from your employers, make sure that you have all the information about both plans. Sometimes it is more beneficial to focus your investment strategies around just one plan.

As well as sharing banking and credit accounts, it also is important to consider the benefits of sharing insurance. At the time of your marriage, it is likely that you and your spouse will be under different health insurance plans with different levels of coverage. Research the benefits of each plan and decide whether it makes sense to keep your policies separate or to consolidate your health insurance.

While you may want to keep your car insurance plans separate, switching to the same company is often a good way to save money. Insurance companies in general offer discounts if you have insured more than one vehicle. They will also offer benefits if you purchase other types of insurance, such as homeowners insurance (which you and your spouse may need!). It is important to regularly go over your insurance coverage and make sure that both you and your spouse are adequately protected.

The key to successful financial planning in a marriage is communication. Getting all the information can help you make informed decisions, and keeping careful records and a good budget can insure that you will realize all of your goals together.

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©2004 The Lawrence Marketing Group

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