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One of the biggest (if not the biggest) investments you can make is choosing a lifelong partner. You and your partner must be aware of each other’s values, goals, and desires as it relates to your money. There is no perfect strategy when it comes to managing finances as a combined unit. However, you both must have at least a general understanding of each other’s finances and long-term financial goals.

That way, you can avoid any unneeded stress or disagreement because you weren’t on the same page. We can all benefit from having a professional, objective third-party who has our best interests at heart to bounce off ideas and provide us with guidance.

 

Here are four financial tips for newly married couples:

 

1) Your income is now taxed as a joint singular entity, so make sure to maximize it.

Before you’re married, you pay taxes separately. Depending on your respective income level, filing jointly may benefit you or cause you to pay additional taxes.

If one person in the household is the primary earner, then filing jointly will most likely provide you a tax benefit due to the larger bands in the marginal tax bracket.

Regardless, it would be best if you worked together to maximize the efficiency of your combined income. If you view your income as combined, you should work together to make sure both of you max out your retirement accounts or additional tax preferential accounts.

If one spouse’s income is substantially lower, it may not be easy to maximize a tax-deferred account like a 401(k) without the higher-earning spouse supplementing their spending needs. These strategies depend on your specific needs and how much cash flow you have to dedicate to discretionary investment contributions.

However, if done correctly, you can substantially increase the efficiency of your after-tax joint income.

 

2) Have a joint checking account and joint credit card for joint expenses.

There’s no “correct” way to approach spending as a couple. The most important thing is that it works for you, and no one is resentful about how expenses are paid. A strategy I’ve seen work for various couples is maintaining a “his and hers” spending approach with a joint checking and credit card for joint expenses. In certain cases, it may make sense to consider a “pro-rata” approach where the higher-earning spouse pays a higher proportion of the fixed expenses.

Again, the most important thing is that you and your partner agree on the approach you’d like to take. As long as both spouses are comfortable with the level of ongoing saving (preferably investing), no one should be concerned with the other partners spending.

 

3) Discuss your individual and joint financial goals.

You may be surprised to learn how different your partner’s individual financial goals are. How important is achieving financial independence to you vs. your partner? Do you want to fund your child’s education savings fully, or do you want them to have “skin in the game”? Our personal experiences with money have a massive impact on how we view the world. Your partner may have had a substantially different experience with money growing up, which will influence their individual goals and preferences.

Again, communication (ideally with an objective, third-party professional) is essential for getting on the same page about what financial and lifestyle goals you’d like to work towards together.

 

4) Have a combined investment strategy that factors in each other’s tolerance for risk.

Like your income, your investments should be viewed as one unit for all intents and purposes. It’s important that you both have a general understanding of your investments, what you own, and why you own it. Your long term financial plan should influence how your investments are structured. Ideally, you’ll factor in your combined tolerance to accept the risk needed to achieve your financial goals. If one partner substantially deviates from the investment strategy, it can have a large negative impact on your combined finances.

Again, communication (ideally with an objective, third-party professional) is essential for getting on the same page about the appropriate investment strategy to achieve your desired financial outcomes.

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