For richer or for poorer, when you get married you’re in it for the long-haul! What’s yours is theirs and what’s theirs is yours, and money is just one of the things that’s included into the bargain.
But what happens if one of you is a conscientious saver and the other has very different ideas when it comes to managing the finances? Or what if your earnings are on opposite ends of the pay scale? Here are our top tips for managing money in a marriage, and maintaining marital bliss until death do you part.
1. Be transparent about your earnings and goals
With the average cost of a wedding estimated to be around £27,000, it stands to reason that married couples should already know a thing or two about each other’s finances. Or so you’d think! 2017 research found that almost half of Brits have no idea how much their partner earns, or whether they have debts.
Almost half of Brits have no idea how much their partner earns
In true British fashion it seems that we’d rather discuss sex and embarrassing health problems publically than talk about our finances in private. Much like in other areas of your marriage, it’s important to be honest and open about money – from how much you earn to your preferred way of managing it.
If you earn a similar amount it can be relatively straightforward, but where you don’t, lying about it or covering it up can lead to serious trust issues and even debts. Being fully transparent about how much money you have and what you’d like to do with it will ensure you and your partner are on the same page from the very beginning and can work out the best approach to managing your money together.
2. Don’t feel like you have to share everything
Sharing is caring, but you don’t have to share absolutely everything with your husband or wife. While pooling your finances can absolutely simplify the day to day running of your home it’s important not to lose the independence that comes with managing your own money.
Have some pocket money that isn’t under the microscope
If setting up a joint bank account seems easier than keeping tabs of who’s turn it is or who spent what, be sure to set clear boundaries for its use. Being equals means you should each pay a similar amount into the joint account, whether that’s a financial value or portion of salary.
Elsewhere, agree what the money can be spent on in advance – whether it’s groceries, holidays or petrol – this will avoid arguments about how much each of you is spending.
Keeping a portion of your earnings for yourself is just good sense when you consider that money matters are one of the biggest causes of stress and conflict among married couples and are often cited as a main reason for the dreaded ‘d’ word (d-i-v-o-r-c-e).
This way you can spend some of your money on the things you enjoy without it having a negative impact on your shared plans and life goals. So whether you enjoy splurging on clothes or showering your loved one with lavish gifts and surprises, you’ll have some pocket money that isn’t under the microscope.
3. Think selfishly when it comes to building your pension
Whatever else you have going on in your life money-wise, it’s important to save for your retirement. Shared property and investments are all well and good, but you’ll want to ensure that you have enough money to live independently in later life, should you need to.
You can use a pension calculator to help you figure out how much you should be saving each month. Simply enter your current age, the age you’d like to retire, how much you have in savings and, most importantly, your retirement goal. Your goal is the target amount of money you’d like to receive as an annual income in retirement.
Aside from the peace of mind that comes with pension saving, there are several other benefits, including tax relief from the government and contributions from your employer, that can help your money grow.
Once you get to grips with your pension you should encourage your spouse to do the same. That way you can ensure you’re able to live the same quality of life in retirement, and will both have the option of accessing your savings from age 55 and over.
The full State Pension pays just £159.55 a week, and the age at which you can start withdrawing it is rising. It’ll be 65 for men and women by the end of the year, increasing to 66 by 2020. It’s highly unlikely you’ll be able to live on this alone, so the earlier you both start saving whatever you can afford, the better.
4. Plan for the end of the road
Our own mortality is a sad thing to consider, especially when it comes to imaging life without our partner or leaving them behind. But as it’s highly unlikely that you and your partner will pass away at exactly the same moment, you need to give some thought to what happens to your shared and individual finances when one of you dies.
Writing a will is the first step, and it’s a lot easier than you may think. While everything should automatically go to your spouse, it’ll help remove the avoidance of doubt. A will is where you can legally state what you’d like to happen to your estate once you pass away, and can help ensure your loved one inherits your money, property and belongings.
It’s possible to decide what happens to the rest of your pension
Being co-signatories on any properties you own is good practice as is naming your partner as the beneficiary of any insurance policies taken out in your name. One example is death in service benefit usually arranged by your employer.
For instance, if you die while employed, a death in service benefit pays a tax-free sum of money from your pension to the person(s) you choose.
It’s possible to decide what happens to the rest of your pension in death too, however your options will depend on how old you are when you die, what type of pension you have and whether you start drawing money out of it before you die. If you’re a PensionBee customer and you’re keen to set up beneficiaries, you can do so in the Account section of your BeeHive.
In some scenarios your entire pension can be passed to your beneficiaries tax-free, and in others your partner may need to pay inheritance tax. Annuities are a little more complicated so it’s important to consider all of your options carefully.
Following these four simple tips should help achieve a rich marriage, free from financial worry.
What are your top tips for managing money in a marriage? Tell us in the comments below.