How to manage your money after marriage
Getting married is an exciting time but it can be stressful, with so much to consider.
Wedding preparations and honeymoon planning aside, there are also more serious issues to think about too - like your finances.
There is no ‘one-size-fits-all’ approach to managing money as a married couple. For some, having separate accounts is the easiest way to keep track of income and outgoings. For others, a joint account is the way forward for paying rent or a mortgage.
So what should you consider when managing your finances after getting married?
Consider a joint account
There are pros and cons to having a joint account. On the one hand, it makes paying outgoings like rent, household bills and food easier. You will also both be able to see who is spending what - which can make staying on top of your finances simpler. It’s important to make sure you have similar spending patterns, habits and behaviours, however, otherwise you’ll disagree and start arguing about money.
If you decide to have separate accounts, any bills like rent or mortgage will need to be split on a case-by-case basis.
To do this, you need to communicate regularly and clearly. Whether you decide to open a joint account depends on the couple, however.
“I think that is going to depend on each relationship because some people are happy to have all their money together, and some people aren’t because it pushes their own buttons about money,” says Anna Goodwin, an accountant who offers personal finance training and mentoring services.
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“I’ve found, when I’ve mentored people about personal finance, that a lot of the time people have their own money and then a joint account in which they pool money too,” she says. “But it’s easier to have it all in one place so you can pay all the bills from that account. You can set up transfers from your own salary or whatever straight into that account. And also because it’s all in one place, it might mean less charges because there is only that account.”
If you do decide to go for a joint account, it can help to agree a spending threshold between you. If you want to spend more on something, you will need to discuss it first.
“It’s always difficult because there will have to be some rules, so to speak, because it might be that one person is quite frivolous with money,” Goodwin explains. “So you need to say - this joint account is to pay mortgage, household bills, there has to be an agreement that if you want to take money out to go to the cinema or something, that has to be agreed.”
Make sure you have a budget
Setting a budget which includes both incomes and all outgoings is a good idea, Goodwin advises, which can include rent or mortgage, household bills, money spent on eating out and other expenditures.
“The important thing within that budget is to make sure all expenses are included, because it’s easy to miss things off that seem to be quite trivial, but then in a family, can work out quite expensive - like school trips or pocket money,” Goodwin says. “It’s all about being able to communicate.”
Be wary of bad credit
Living with or being married to someone with a bad credit score won’t affect yours. If you open a joint bank account or take out a mortgage together, though, your credit rating could be affected.
It’s helpful to make sure you check and have a conversation about credit ratings before combining your finances, to make sure you are both on the same page.
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Make sure you are equal
Not everyone is interested in finances, but it’s important to have a basic understanding of your income and outgoings, Goodwin advises. By doing this, you can avoid a situation where only one of you understands your money situation.
It helps if you both know what you earn and what you can or can’t afford. If something happens to one of you, it means the other will have an idea of their financial affairs.
Think about tax
“The Married Couples Allowance says ten percent of a person’s personal allowance can be transferred to the other spouse,” Goodwin explains. “And what that means is that the person who earns more increases their personal allowance. It’s not a massive difference but every little helps.”
Currently, married couples and civil partners can transfer £1,250 of their personal allowance to their partner. This means the partner who earns more will get this amount added to their personal allowance - the amount you can earn before having to pay tax on your income.
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