Personal Finance Tips for Newlyweds

Personal Finance Tips for Newlyweds

May 29, 2013         Written By John H. Oldshue

LowCards is a Citi partner. These offers, valid when the article was written, may have expired. View our full editorial disclaimer here.

June is a popular month for weddings, and couples are joining together to form new families. This season of celebration is also the time to set the household budget and establish financial priorities.

Many couples begin marriage with one or both partners in debt from student loans or credit cards. According to Forbes, the average student loan debt for the 2018 class is over $29,000. In addition, the average credit card debt per household is over $7,000. That is a lot of debt being brought together when two people decide to wed. Because finances can cause a lot of stress on new marriages, we’ve compiled some tips for newlyweds to help ease them into marriage.

Featured Fair Credit Card

Top Features: All credit types welcome to apply!

Financial tips for newlyweds:

  • Before you get married, know how your future spouse handles money. Even if you agree on almost everything, don’t assume your spouse shares your beliefs about money. Pay attention to how and where the money is spent.
  • Before the wedding, reveal everything about your finances, including income, debts, giving and retirement accounts. Share your bank statements from the past twelve months. Explain your strengths and weaknesses with money and whether you function as a spender or a saver.
  • Each of you should get a copy of your credit reports from the three credit bureaus. This will give you a clear picture of credit accounts, debts and how creditors will judge you. Aim to get your scores over 750 to receive the lowest interest rates for your first mortgage and other loans. A low credit score has a widespread effect on interest rates, insurance premiums and employment. Nearly 47 percent of employers use credit checks when making a hiring decision, according to a 2012 survey by the Society for Human Resource Management.
  • If your partner has been married before, find out about the financial obligations to the ex-spouse and children.
  • Have a wedding and honeymoon that you can afford. Do not start a life together charging thousands of dollars in wedding and honeymoon expenses to your credit card if you can’t pay it off within a year.
  • If both of you work now, live on one salary and save as much as you can of the second income. This helps prepare for income interruptions in the future such as starting a business, changing careers, returning to school or starting a family.
  • Avoid credit card debt. If you can’t pay for something with cash, you can’t afford it.
  • If you have a credit card balance, pay as much as you can above the minimum each month. If you receive gift money, a bonus, a second job or a tax refund, use this to pay off your debt. You can even make micropayments multiple times during the month to pay off your balance faster. Eat a meal at home and immediately apply the money you saved to your credit card balance.
  • Before the first bills come in, decide who will pay them and when this will take place. If you have separate accounts, know which account pays each bill. Also notify creditors of your name change and new address.
  • Reduce your debt-to-available credit ratio. This will help improve your credit score. Your monthly debt, including your mortgage, should not exceed 30% of your gross income.
  • Each spouse should have a credit card in his or her own name to build an individual credit score. Keep that card for a long time. Use the card for several purchases each month and pay the bill in full immediately. Building a long term payment history with one or two credit cards is an important factor in your credit score.
  • Beware of little debts. Debt creeps up in little ways like the vacation, gifts, entertainment or car that is more than you can afford. The debt and interest payments can quickly increase.

Getting married is an exciting and joyful step in life. Your new marital status does come with fresh financial considerations as we’ve pointed out. In general, there are five solid guidelines to follow to ensure that you and your future spouse are aligned and moving in the same direction in terms of your finances and credit cards.

Guideline #1 – Have Honest Conversations

As with most things in a successful relationship, it is important to be open and honest. You and your spouse should have a conversation about any outstanding debt and spending habits. If you have debt on your credit card as a result of youthful spending sprees, talk to your spouse about it so the two of you can work on a plan to pay off the credit cards as soon as possible.

Not only should you talk about your own financial histories and habits, you should also discuss your parents’ relationships with money. Often, we mirror the spending behavior of our families, so being aware of whether your spouse had parents who were frugal or shopaholics can help you understand your partner’s own spending inclinations.

Guideline #2 – Create a Budget Together

While it may not sound like the most fun activity, creating a budget together is important work. Both of you should spend a month tracking your income and expenditures. Then, sit down to see precisely how much money you are bringing in and exactly how much is going out. Remain respectful during these conversations and stay focused on how you can both spend more responsibly. Finger-pointing and arguing over finances is common but is not the healthiest way to start a marriage.

As you look at expenses, consider your other goals. You should try to save at least 20% of your income each month, and put aside extra money to pay off any outstanding debt. See if there are places where you could cut costs so you have more money to devote to savings or debt reduction.

Guideline #3 – Set Goals

To make budgeting a bit less dreary, set financial goals together. Instead of just saving for a rainy day, discuss what else you would like to do with your savings. Do you both dream of a trip to Europe? Figure out how much you will need for the vacation and create a savings plan to get there. Plan to have a family? Put an exact number on how much you would like to save before you have your first child. It will be easier for both of you to bypass your morning Starbucks fix when you have a concrete vision of where the money is going.

Guideline #4 – Create Limits

Once you have your budget and savings goals set, you will also want to consider setting limits that work for the two of you. If your husband has a tendency to buy clothes he does not really need, set a monthly limit on how much he can spend on clothing purchases.

However, don’t be too restrictive. Yes, the two of you should be working together toward common goals, but you are also not your spouse’s warden, so they should have some freedom to spend money as they best see fit—within limits.

Guideline #5 – Never Lie

While married couples should have the freedom to spend money within predetermined limits, no one should ever lie to their spouse, which means no secret spending sprees. You should also not open secret bank accounts or credit card accounts without telling your spouse. When your spouse finds out, and they eventually will, it could erode the trust in your relationship, which can then seep into other aspects of your partnership.

In that same vein, opening new credit card accounts should be a joint decision. If you see a tempting credit card offer online or are offered a discount by the cashier in your favorite retailer, it is best to wait until you have the opportunity to discuss whether the card is a good idea with your spouse. Whenever you apply for a credit card, a hard inquiry is made on your credit report. Too many of these in a two-year period will lower your score, which can affect you and your partner’s long-term goals.

Your spouse is your “business” partner as well as your life partner. Your credit, good name, and financial future will be tied to this person. Don’t assume that your spouse thinks the same way you do or shares the same beliefs about money. Their spending and saving habits may surprise you.

Experts suggest having an honest discussion about money; if one partner has difficulties managing debt or spending, it will not only affect the couple’s financial situation but could also affect the other’s credit score.

Talking about money is difficult for anyone, but discussing finances before the wedding is a good way to test the relationship. If you can’t have an honest discussion about finances before the wedding, then this may not be the person you want to join together with for the rest of your life. Statistics show that finances are one of the biggest causes of stress in a marriage, so you will be better off if you can confide in each other and create a financial plan together.

The information contained within this article was accurate as of May 29, 2013. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

Review LowCards.com Editor’s Top Cards!

2020 Top Credit Cards by Category
Featured Fair Credit Card
Reflex Mastercard® Credit Card
EDITOR RATING
Featured Fair Credit Card
Reflex Mastercard® Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: All credit types welcome to apply!

Featured Low Interest Card
ABOC Platinum Rewards Mastercard®
EDITOR RATING
Featured Low Interest Card
ABOC Platinum Rewards Mastercard®

Applying for this card will securely direct you to the issuer's website.

Top Features: No annual fee; $150 statement credit after spending $1,200 in first 90 days; 0% on Purchases for 12 months

Featured Bad Credit Card
First Digital NextGen Mastercard® Credit Card
EDITOR RATING
Featured Bad Credit Card
First Digital NextGen Mastercard® Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: Reports to all three credit bureaus, perfect credit not required for approval

Featured Good Credit Card
Petal® Visa® Credit Card
EDITOR RATING
Featured Good Credit Card
Petal® Visa® Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: No fees whatsoever. No late fee, international fee, annual fee, or any-other-kind-of-fee, fee


john-oldshue

About John H. Oldshue

John Oldshue is the creator of LowCards.com. He worked for over 15 years in television and won an Emmy award for his reporting. He covers credit card rate issues for LowCards.com.