Among the romance of it all, it is easy to put aside the fact that getting married means more than just saying ‘I do’.
For most couples, marriage means a merging of finances. With a lot of marriages ending because of disagreements over money, it is worth getting on the same page about how you will approach what can be a tricky area to navigate.
What changes after marriage?
In reality, not much changes in your everyday finances once you’ve taken your vows. You can receive some tax benefits under the marriage allowance (only if one of you isn’t a high-rate tax payer), and there are some benefits surrounding paying a lower rate of tax on interest earned from savings. One of the most significant gains is that if one of you were to die, the surviving partner would not be charged tax on anything he or she inherits from the estate.
However, the biggest change comes if you decide to take out a joint credit agreement in the form of a joint current account, mortgage or loan. Vows do not create a financial association, but these financial products do. This means that you are both responsible for the debt, and in the case of a joint current account, money is owned equally regardless of who deposited it into the account.
So how can you manage your money?
It is down to personal preference how you manage your money in a marriage, but here are three possible approaches you could adopt:
Separate accounts – You could just keep separate accounts for everything. In this situation you are not taking on any joint financial responsibility, but it could get complicated in terms of paying bills and household costs.
Halfway house – You could have a joint bank account that both of you pay a proportion of your salary into and that covers expenses and household bills. Then you would each maintain a separate bank account and therefore retain an element of financial independence. This can get complicated if there is disparity in your incomes, as you would need to work out what amount each of you should contribute to the joint account based on how much you earn. It can also become complicated if you add children into the mix, especially if one partner takes a hit financially by going part-time or giving up work in order to look after them.
Merge finances – The final option is to merge your finances entirely. In this case you would pay both salaries into one account (if you have two sources of income) and use that for everything. In terms of management, this makes it easier because you are just dealing with one pool of money, but it does mean a loss of financial independence. If you were to then separate, it could make it harder to divide up your finances.
The key thing is that in terms of debt, you are only liable for debts in your name, not for any debts of your partner. This applies to your credit score as well: if your husband/wife has an issue with debt, this will not affect your own credit rating unless the issue relates to a financial product that you jointly hold.
As with any sort of financial management, it is best to make a monthly budget and be aware of what you can and cannot afford. You can either do this separately, or if you are sharing finances, together. As difficult as it may seem sometimes, being aware of what money you have going in and coming out makes life that much easier and helps you to avoid getting into financial difficulty.
And as with anything in marriage, communication is key. It is best to discuss what financial responsibilities you and your spouse have both individually and jointly, and therefore what your money should go towards. From filling up the car to covering the mortgage, it all matters when you are sharing a life together.
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