How to Talk About Finances with Your Spouse

In a marriage, being on the same page with your spouse regarding your finances is extremely important. Not talking about money can lead to fights, overdrawn bank accounts, underfunded retirement savings, home foreclosure, bankruptcy, and even divorce. But many couples steer clear of financial conversations because they’re afraid of sparking disagreements and arguments. In fact, marital experts say finances are one of the top sources of anxiety in married relationships.how-to-talk-about-finances-with-your-spouse

So what’s a married couple to do? Sit down and talk, that’s what. Here are some tips to help you and your spouse get on the same page about your finances.

First and foremost, schedule a time to meet. Talking about money is serious, and you should treat it that way. Try to have your discussion in a place that’s free of distractions, whether that means heading to a local coffee shop, or waiting until the kids are in bed.

If you and your spouse don’t each have a good sense of where your finances stand, that’s where you should start. Go through your all of your bank accounts, investment accounts and retirement accounts, noting the balances of each. Then, discuss all of your debt such as credit card balances, the money you owe on your mortgage and any vehicles you have, plus any other payment obligations you’re facing such as student loans, alimony, or child support.

If while digging through the numbers you find that your current financial situation isn’t as rosy as you’d like, it’s important to stay calm. Don’t point fingers at one another and start playing the blame game. Doing so will only derail the conversation and make you both weary of future financial discussions. Look over the numbers together, but don’t judge.

Once you’re both on the same page regarding where your finances stand, you should start talking about your financial goals. Listening is key here. Each spouse should have a chance to voice their own goals – without interruption or judgement – and then you can hash out which goals are the highest priority to you both. Once you’ve each laid out your personal goals, you should evaluate together which ones could have the biggest positive impact on your lives, and consider which ones will be easy or difficult to achieve. Rank the goals based on these factors, and pick one that you’re both comfortable with – whether it be paying off your credit cards, saving for a family vacation, starting a college fund for your kids, or buying a second home.

After you’ve agreed on a goal, it’s time to create a budget that will allow you to work toward it. Together, you should determine exactly how much money is coming into the household each month, and how much money is going out. In other words, how much income are you bringing in, and how many bills are you paying every month, and how much money are you putting into savings? Make tweaks to your budget that align with the goals you’ve laid out. For example, if you’re trying to pay off your credit card debt, you need to determine where that money will come from. It may mean canceling cable and going with a lower-priced video streaming service, or it might mean shopping around for less-expensive car insurance.

Once your goals have been established and you’ve mapped out a budget for achieving them, it’s important to remember that that the conversation is far from over. Keep each other informed about any expenses that fall outside of the budget – ideally before they happen. For example, if your child is going to need braces, or you’re thinking about buying a membership to a golf club, sit down and talk with your spouse first about how it will impact your finances and goals. No one likes to be blindsided with a major purchase they had no say in. Without ongoing communication about financial affairs, confusion and mistrust can surface and wreak havoc on your marriage.

Should You And Your Spouse Use Joint Accounts or Separate Accounts?

It’s a question that inevitably comes up when two people marry. Should they continue to utilize their own separate checking and savings accounts, or should they merge their finances into joint bank accounts?AdobeStock_90060964

What works for one couple may not work for another. Because both banking approaches each have their own set of advantages and disadvantages, it’s important to explore, discuss, and weigh all options before arriving at a mutually agreeable decision.

Some of the distinct advantages of joint bank accounts include:

  • Because a joint account generally results in more money being pooled together, it can help with avoiding account fees such as those associated with maintaining a minimum monthly balance.
  • With a joint account, both parties have access to the money in it. This can prevent you from having to frequently transfer money between your account and your spouse’s account, and it can also be convenient in an emergency, or if one spouse passes away.
  • It can make it easier to handle shared expenses and bills. Instead of having to determine how much money should come out of your individual accounts each time a payment is due, you can simply write a check, or schedule bill payments, directly from your joint checking account.
  • Because both spouses can see the spending habits of the other, there is an increased level of accountability with a joint account. With both of you viewing the money as “our” money instead of “my” money and “your” money, there’s also a higher likelihood of financial communication regarding the household’s budget and purchases.
  • If either you or your spouse is a stay-at-home parent, a joint account could help alleviate tension and resentment. Since the stay-at-home spouse doesn’t have a traditional salary to place into their own separate account, having access to the funds in a joint account could help them to feel valued and compensated for work they do inside of the home.
  • In the event that one spouse loses their job or is out of work on medical leave, having a joint account already in place can prevent you both from having to merge your money at the last minute. It can also prevent you from having to cancel and re-do any bill payments that may have previously been scheduled from the out-of-work spouse’s account.

On the flip side, merging your money into a joint account has some disadvantages as well. These include:

  • Some couples associate a joint account with having to surrender their financial independence. With a joint account you and your spouse could feel trapped without each having access to “your own” money.
  • With many couples marrying later in life, there’s a good chance of both parties coming into the marriage with their own finances already in good, working order. For example, you both may have bill payments scheduled from your own individual checking accounts, or you may have your pay from work directly deposited into your own account every week. These things could be a bit of a hassle to un-do and re-do, so some couples may prefer to leave their accounts “as is” after they tie the knot.
  • With a joint account, there is a lack of privacy in regard to your finances. You may not want your spouse nagging you about that coffee you buy on the way to work every morning, or maybe you just want to be able to buy them a present without them seeing the transaction details on your joint debit card statement!
  • If one spouse enters the marriage with student loan debt or alimony or child support obligations, the other spouse could become resentful if those payments or to be made from joint funds.
  • When bills are paid out of a joint account, it’s fairly typical for one spouse to manage the couple’s finances. This could eventually turn into a point of friction if the spouse who’s managing the money starts to view the job as a burden or chore.
  • In the event of a separation or divorce, a joint account can become a bit challenging. Because both parties have legal access to the money in the account, it’s possible for one spouse to drain the funds without the other knowing. Even if you both leave the money where it is, it can be messy determining who gets exactly what from a joint account after the relationship is over.

As you’re deciding which type of account is right for your marriage, keep in mind that there is a third option – having a combination of both joint and separate accounts. Some couples keep a portion of their incomes in separate accounts so they can still access “their own” money, while each contributing to a joint account as well. A joint savings account could be used to save for things like a down payment on a home, college tuition, or a vacation, while a joint checking account could be used exclusively to pay major monthly bills such as mortgage payments or utilities.

No matter what banking approach you decide to use, it doesn’t hurt to revisit the arrangement on a regular basis to determine if it’s still the best fit for your family.

You can learn more about Bank5 Connect’s High-Interest Checking Account here: http://www.bank5connect.com/home/high-interest-checking

You can learn more about our High-Interest Savings Account here: http://www.bank5connect.com/home/high-interest-savings