For richer, for poorer: Managing money after marriage

April 10, 2017

Does tying the knot tie up your dough? We explore how couples figure out their finances after walking down the aisle.

Tying the knot is a big deal but for some sharing the finances can be an even bigger commitment. Of course you don’t have to be married to share your money and many couples take this step long before they say “I do”. Joint savings, credit cards and mortgages can make financial sense.

Combining savings can attract more interest, fewer fees and steer couples towards their financial goals faster. Two names on a mortgage mean there’s less pressure on each person, particularly if one loses their job, gets sick or needs to go part-time, and a joint credit card allows couples keep track of their expenses more easily and rack up more bonus points.

On the flipside, shared accounts can put pressure on a relationship. If one person is a big spender, frequently out of work or has substantial debts, all the benefits of merging money go out the window, at least for the other partner.

Talk it through

Mercer strategic partnership manager Helen Angwin says an honest discussion about financial goals and spending is a smart starting point.

“Each party needs to understand what their cashflow is,” Angwin says. “What they can do is very simply talk about three categories of expenditure: non-discretionary expenditure; discretionary spending; and savings.”

Getting on the same page about money can help couples avoid financial and relationship breakdown. Understand each other’s spending habits, be frank about debts and credit ratings and discuss who will pay the bills. A wide-ranging discussion will set ground rules for the future and help frame a budget.

“It all comes back to understanding your cash flow – what you’re bringing in and what has to go out,” Angwin says. “The people who become really effective savers are people who are right across that and know exactly what they’re spending.

“And the people who do well – and I’ve seen hundreds of people – are those who are really disciplined and redeploy the savings to do what they want.”

Yours, mine and ours

For those who choose not to share all their finances, there is a way to compromise. Couples can isolate their finances with the exception of one joint account, into which they deposit equal amounts and use this to pay non-discretionary bills. This method is also an option for couples who want to trial the idea of sharing with a view to later merging other accounts.

Relationship counsellor Dr Karen Phillip advocates this system, particularly for women who take time away from work to raise children. “I recommend having both,” she says. “I say have a joint account for all their normal, everyday things and then withhold – depending on their wage, $50, $100 or $200 – into their private accounts so they can spend it on what they personally want.

“These days with women who may stop work for a while to raise their children, it’s very important they retain financial independence with money in their own account.”

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