Saying “I do” is just the beginning. This is the start of your new life as a married couple, and it’s normal to be both excited and nervous about this next step. Whether you’re living together for the first time or finally taking a look at your marriage and finances, you are merging two separate lives together. Furniture, appliances, kitchenware, books and artwork – they’re all subject to downsizing, rescaling and dividing, and so are your finances.
This is something a lot of couples overlook because it’s easy to look at life through rose-coloured lenses when you’re in such a great relationship. Plus, when combined with the stress and planning of a wedding, there are often so many other details demanding your attention.
In reality, your shared finances matter. One of the leading reasons of divorce is actually financial troubles. While it’s hard to talk about, setting a strong financial foundation now will help you prepare for the future.
What Happens to Marriage Debt
First thing’s first – you have to talk about debt. People today are plagued by all kinds of debt, from consumer loans (ie. credit cards) to student debt. Taking on the financial obligation of another person’s debt is no small feat. Add to that the fact that most weddings are expensive and you are left with a young couple who is starting their new life together swimming in debt.
What can you do about it? You can look into things like getting debt consolidation loans and enlisting the help of debt negotiators. Both of these options can help alleviate some of the financial stress and burden that you and your partner may be facing.
It can be daunting for a young person to tackle debt so early in life – and so much of it – so if you are in this position, don’t be afraid to ask for help. Most importantly, try to solve these problems together.
When you decide to bring your lives together, whether you took vows or not, you take on everything together, not separately. There is strength in numbers, so it is essential that you both feel like you are able to work together to reach a solution.
How to Divide Household Expenses
Household expenses are oftentimes the root of all financial arguments in a couple. Household expenses can sneak up on you slowly, seeming insignificant at first. Before you know it, an astronomical number is staring you in the face and all you can think to do is blame your partner. After all, you can’t have possibly spent all that money yourself!
This is where most people lose their cool and their good judgement.
When you feel like daily expenses are mounting up without a clear justification, take the time to go over them with your partner, one by one, and discover where your money is being spent by preparing a budget.
Blaming each other, while avoiding any kind of responsibility, is a sure-fire way to damage your relationship (maybe irreparably). It also does absolutely nothing to help your financial situation in any way. If your expenses are simply too much for you to realistically handle, then consider one of our professional debt solutions to get your life back on track.
Making a Plan for Your Dual Income
Nowadays, most households are dual income households, because it’s very difficult to sustain a home on just one income in this modern world. How do couples manage this shared income and how is it divided, if at all?
There are a few common ways to share your household income and expenses when it comes to marriage and finances. See which one of these options below best fits you and your partner:
- Separate finances – The first option is for each spouse to manage his or her own separate account. This keeps each partner from worrying about each others spending habits, but you’ll also need to agree on who will pay what when it comes to shared expenses.
- Merge money halfway – Another option is to merge some of your funds. Each partner will keep his or her own separate account, but will also be a part of a new, shared account. This new account can be used to pay for marriage debt, household expenses, and shared activities.
- Unified Finances – Finally, the last option is to fully merge your accounts. All income and expenses will be put into and taken from shared accounts. Before doing this, it’s a good idea to set up a strong budget and to consider what will happen to your finances in the case of divorce or separation.
Marriage with Unequal Incomes
Ideally, each partner would bring in an equal share, but that is rarely the case. Instead, more often than not, one partner makes significantly more money than the other and that can easily lead to frictions, jealousies and bigger problems in the long run.
How do you solve a situation where income is imbalanced?
Again, there are a few options:
- Equal – One solution could be that both partners put in the same amount of money into the household. This seems more than fair, but you have to keep in mind that the same sum of money will constitute different income percentages for each of the two partners, putting a greater financial burden on one partner.
- Percentage – Another possible answer to the problem is to take out the same percentage of both incomes. This way, both partners contribute to the shared expenses and neither of them is unfairly burdened by the amount of money they are putting forward.
- Shared – Finally, if the couple pools all income together completely, there’s no need to look at income percentages.
Deciding who will pay for what and how much of each partner’s income will go towards expenses is a big decision, but one you should make early. If your couple philosophy is that you share everything, including money, then pooling all of your income together might be the ideal option for you – merging marriage and finances completely. On the other hand, if you’re worried about nitpicking your partner’s spending, it might be better to decide on a fair percentage for each partner to each contribute.
If you have any doubts or negative feelings about this arrangement, be sure to voice them to your partner. Money should never be the source of resentment when it comes to marriage and finances.
Combine Your Marriage and Finances Confidently
All in all, the most important idea to take away from this is to make all of your financial decisions together. Making sure you’re both on the same page is key to avoiding money quarrels.
There is no “right” and “wrong” way to divide income and expenses when you’re married. As long as you and your partner agree on something that works for you and you have a plan to pay off your marriage debt efficiently, you’re on the right track.
If you run into some troubles, don’t wait till the overdue notices and debt collection calls to start. We’re here to help you with our professional advice. Contact us today on 1300 368 322 for a free consultation so you can get financial peace of mind and focus on what really matters to you.