As a couple; You are spending and saving with a partner now!
Time, work, responsibilities, feelings/emotions, your outlook on life, your view of the world and the way the world is seeing the two of you (as a married couple now) – are some of the many things that are affected by marriage if not radically changed.
In addition to the aspects mentioned above, the financial life and money aspects are indeed worth discussing and paying attention to.
Financial controversies make married people 30% more likely to get divorced. (2020)
Some aspects of how both of you will handle money in your future married life could be:
- Are both or any of you handling the financial obligations of day-to-day life?
- What are each other’s financial goals and financial priorities?
- Will you both keep your finances separate or choose a joint account?
- Who is the saver/spender out of the two of you? (your money personality)
This sit-down discussion before marriage is not the most romantic thing to do, no lie!
However, putting all your financial information/status on the balance is extremely important today. Assets, liabilities, wedding budgets, credit records, credit scores of both partners must be disclosed – ask your married friends; Their opinion will be no different.
Communication, accountability, financial planning and mutual trust are extremely important whenever both are trying to do financial planning as there is no mathematical way to do so!
Financial benefits of getting married
Whenever and wherever the two of you vow to build and spend a life together – you are literally planning for each other’s health, happiness, and wealth.
Without a doubt, money is a big part of married life, which can bring ups and downs if not handled intelligently – although it also offers some sweet financial perks. both partners:
Retirement benefits
Married spouses can certainly take advantage of their partner’s social security benefits. The partner can claim the spouse’s retirement benefits (depending on the partner’s work record).
The number of married people in Canada is about $14.3 million.
There are conditions for these benefits as these spousal privileges can be claimed at age 62 (at least). However, if one applies at full retirement age, the value of these benefits will decrease.
Moreover, the partner together is a wise duo. Each can help the other plan for retirement in the best possible way (regarding circumstances and conditions).
Social Security Benefits
Partners are entitled to social security benefits for their spouse (in case the couple qualifies for these privileges).
Also, when the spouse retires, he/she is eligible to receive those benefits in the event of the death of the spouse. However, your social security benefits are neither increased nor decreased by marriage.
If you remarry or file for divorce, you are no longer entitled to claim benefits from your ex-spouse (conditions available depending on your age of marriage).
The maximum amount of Social Security benefits a worker’s family can claim is between 155% and 188% of the person’s monthly benefit amount.
You can collect these Social Security benefits if you are single again.
Credit building
While some Canadian financial institutions are reluctant to allow co-signing, others allow married couples to jointly own secured credit card ie, the spouse is a co-signer/authorized user/joint credit card holder.
45% of people (aged 27-36) think that credit scores influence their decisions about relationships.
When one partner has a worse credit score, the other partner can play a helping hand by:
If you have a poor credit score but want a loan for a car, home or other necessities – your spouse with a good credit score can help you get this loan.
Your spouse may be the one authorized to use your credit card account (unsecured and secured credit cards). If you can’t pay off your monthly balance – your partner can pay on your behalf (if he/she earns more).
What’s more, they can motivate you to smartly plan your monthly payments and remind you in case any bills slip through your mind.
Wealthy Building
If both spouses work, one can pay the mortgage while the other can contribute to the family’s savings and investments. Thus, it is easier for families to build wealth.
How can a newlywed couple ideally manage debt and money?
“Smart!” is a one word answer to this question. The following points will help you to behave wisely in your marriage:
- Financial Goals and Priorities
You can avoid financial pennies by talking to understand each other’s financial priorities and goals. That way, both of you will have a different way of getting to know each other and discover the similarities or differences between the two of you!
- How will you divide your income for essential needs in the family?
- What is your view on saving and spending?
- How will you divide your income between luxuries (like travel/annual vacations, expensive valuables like vehicles and jewelry)?
- Are you planning to have children? (If so, who and how will you manage expenses such as higher education and parenting costs)
- Do you believe in donating and how much?
While answering these questions, both of you may discover similarities in your financial priorities or differences. This is the best time for the partners to decide if they can compromise on a number of factors.
Furthermore, prospective partners may share financial goals such as:
- Retirement plan (late or early)
- Business Ownership
- Rent or own a home/real estate property
Spending money profligately can increase a married couple’s chances of divorce by 40%.
3 ways to get financial as a newlywed couple
These monetization strategy choices will help you Manage your money better.
Use joint accounts as a couple to manage money
Groceries, shopping, kids expenses like school/sports, home repairs/vehicle maintenance, health expenses like gym, hospital and medication fees, expenses Incidents can be well managed by joint accounts.
Money in and out is continuously recorded on a bank account spreadsheet, and a budgeting app helps him and his wife keep track of this information.
Use separate accounts as a couple to manage money
Both have the freedom to keep their finances separate from each other – as they did before their marriage.
However, this financial strategy requires a good amount of communication to clearly define who will be responsible for what. If you don’t choose a joint bank account, you should both use the same spreadsheet to track expenses.
28% of married couples keep their bank accounts completely separate.
Use both joint and separate accounts as a couple to manage money
It can be difficult to manage mixing the two. But it is a good choice for those who want to manage their income/savings/investments together in a joint account. In addition, they can enjoy the freedom of separate accounts in which they transfer a certain amount each month.
This money can be used to spend luxury or buy gifts for your partner.
77% of married spouses share at least one account with each other.
In the event that your marriage does not work out, this agreement stipulates in advance how your assets will be divided.
This arrangement seems like the both of you are trusting each other and brings bitterness to the promise of a lifetime of togetherness.
Follow Statista’s 2020 Study2.7 million people have legally filed for divorce in Canada.
However, if both are wise and are bringing some assets – or debts – into the marriage, the significance of the prenuptial agreement is even higher.
Advantages of Cooperation Agreements
- Accounts Payable Allocation
- Using pre-marital content
- Post-divorce resolutions and expectations are decided in advance
- Handling possible conflicts in the future is very convenient
In Canada, the cost of prenuptial agreements is around $500-$2,000 + HST
- Make a monthly budget | Day and Night Budget
Even if a couple is too rich, money management is still fundamental.
You should both have an open conversation about what came and what happened (financially) last month and how we can improve the situation next month.
In Canada, the average cost of living (excluding rent) is $1,200 monthly.
Monthly budgeting is important even if only one partner handles the household expenses. You can arrange a frugal date night at a restaurant, the couch at home, or your dining table. Spending time together while chatting about something worthwhile is a win-win!
Monthly income and expenses, distributing fixed and variable expenses, and making adjustments can help you get the most out of your household budget.
- Debt management as a couple
Lying or hiding your debt/financial situation is a very bad idea – both of you must have the courage to discuss the factors (bulleted below) to avoid future disclosure, indeed are future shocks!
- Do you have any unpaid debt?
- How long can you pay off these debts (if any)?
- Are you a saver or a spender? | Spending habits
- How many credit cards do you have? What is their balance?
- Credit score
- Did you bring any expenses (child support) from your previous marriage?
Without sharing this information, the couple could never contribute to common future goals.
Avoid debt
There are countless ways you can do so, it’s important that you stick to the plan no matter what!
- Student loans: Search for debt repayment options and choose the most suitable one.
- Credit: Try to pay off all balances in full each month.
- Credit advice: You can seek advice in the early days of your marriage and follow it for debt management.
- Installment loan: Pay off high-interest loans as soon as possible to get rid of the accrued interest.
- Debt Consolidation: For faster and more efficient debt forgiveness, partners can collect information related to debt consolidation. Generally, it means combining debt to get a relatively lower interest rate.
Once you take the oath, it is “our team”, “our debt” and “our income”.
Sympathizing with each other and avoiding the blame game isn’t easy, but you have to do what you have to, right?
Some of the best budgeting apps for couples are:
Love requires no effort, especially when responsibilities (monetary obligations) are involved. Try to listen to each other, come up with a debt settlement plan together, and push each other to do it.
Not just money, this teamwork will help the newlyweds in all aspects of life together, all of that.
