Navigating Marriage Finances Before Tying the Knot

A long engagement before tying the knot has benefits. Beyond having the pick of venues and vendors, it also affords you time to get your marriage finances in order.

As Certified Financial Planner ® professionals, we know the importance of having a solid financial foundation when entering a marriage. We talked and walked the walk when planning our wedding.

Here are a few financial exercises we recommend for any happily engaged couple.

#1 Define where you are today

Individual balance sheets

Create a personal balance sheet. List all your assets, such as bank accounts, investment accounts (like brokerage or company equity accounts), retirement accounts, and any real or tangible property you own. Go through the same exercise to account for any current liabilities.

Discuss these assets and liabilities, which opens the door to deeper conversations about how you view financial contributions. Maybe some assets came from an inheritance, or you’ve been saving for years. Either way, the key is open communication, whether you keep certain assets separate or merge everything into joint accounts.

Remember, your balance sheet is just a snapshot — it’s your financial floor, not your ceiling.

Debt

As you review your balance sheets, focus on the liabilities side. This includes any debts you’re actively paying off, whether a mortgage, student loans, or personal notes owed to family members. Be transparent about these obligations and discuss how you’ll manage them together. Remember, not all debt is bad, but it’s important to have a collective plan for how liabilities will be paid in a joint household.

Additionally, have an open conversation about spending habits. Discuss fixed versus discretionary expenses and be realistic with each other. This isn’t a blame game; you want to understand each other’s spending patterns.

Family support

Lastly, consider family support. If you have aging parents or other relatives you expect to support financially, talk about what that might look like and how you plan to provide that support. These discussions will help you feel prepared and aligned as you move forward.

Credit scores

Credit scores reflect your financial habits, including credit history length, number of open accounts, and payment punctuality. Share your credit scores and discuss how you can work together to improve or maintain them.

#2 Define responsibilities

Something that we have found helpful is setting aside time monthly to discuss our finances and what’s on the horizon—whether it’s an upcoming trip, work reimbursements, or anything else tied to finances. Even if one of us handles the day-to-day tasks like paying utility bills, there’s a back and forth on the numbers. Early on, these conversations also involved defining who was good at what and which one of us wanted to run point on certain responsibilities. With this structure in place, we’ve found a great working system for managing our joint financial lives based on mutual and individual strengths.

#3 Create a joint plan

Understanding your income is about more than what you take home monthly. You want to break down each source of your income—base salary, bonuses, or less frequent payments from gigs or large projects. And don’t overlook other sources like rental income, annuities, pensions, or equity compensation.

Then there are outflows. Identify fixed, discretionary, and unexpected expenses, such as auto maintenance or quarterly tax payments. You need to know how you will manage cash flows for both the expected and unexpected.

For some, maintaining separate accounts for personal spending while routing joint expenses through a shared account works well, while others may adjust contributions based on income disparities. The key is aligning your financial resources with your short-term, long-term, and intermediate goals, ensuring each of you feels financially secure and supported.

#4 Assess household expenses

Create a realistic budget to manage combined expenses effectively. Track your expenses over time to establish trends and periodically review them to ensure you stay on course. It is okay to pause and pivot! If spending is higher in certain areas — like travel due to, ahem, your best friend’s wedding —flag it and air it in your regular financial check-ins.

And nothing says marital bliss like driving down spending through efficiencies. If you have separate subscriptions to services like Amazon Prime or Netflix, consolidating those can save money; family plans for services like Spotify can cut costs and scale out to other family members. (And, no, we aren’t talking about account mooching.) Beyond subscriptions, you might find it more cost-effective to shop for two people rather than one, thanks to bulk packaging at the grocery store. Economies of scale may not be why you married, but it’s not a bad perk.

#5 Implement a savings strategy

One strategy that has worked well for us is setting up a “portfolio paycheck,” where you pay yourself first. We maintain a joint brokerage account that serves as the central hub for our income, from which we distribute funds to our various accounts. Our joint checking account handles all recurring expenses, such as autopayments and monthly bills. We transfer enough from our brokerage account each month to cover these lifestyle expenses, ensuring our financial obligations are met while allowing any remainder to accumulate in the portfolio.

Beyond this, we have established different savings buckets tailored to our specific goals. For example, we use a high-yield savings account for our travel fund, which has been particularly useful as we’ve prioritized travel during our first year of marriage. We also set aside funds in a money market account to cover quarterly tax payments.

For medium-term goals, such as a down payment on a future home, we keep those savings in our high-yield account. Short-term needs are addressed through our checking or money market accounts.

Compartmentalizing our savings helps us stay organized and is a passive saving strategy. Once these buckets are full, any extra funds are redirected to retirement savings or back into our brokerage account.

Retirement planning is another area where we’ve found efficiencies. We are in similar jobs and earn comparable incomes — we’ve maximized our retirement contributions to take advantage of tax benefits and company matches. For couples with income disparity, combining finances might allow the higher-earning partner to cover more lifestyle expenses, freeing up the other to max out retirement contributions. This approach ensures long-term savings remain a priority without compromising day-to-day financial stability.

#6 Maximize company benefits

When it comes to 401(k) deferrals, you have the option to contribute on a pre-tax or Roth basis, depending on your tax situation. We always recommend maximizing your contributions to take full advantage of the employer match. If you’re combining finances, this could allow you to contribute even more.

Combining medical benefits is a significant decision when merging households, especially post-marriage. After getting married, you have a 60-day window to switch to a family plan or an individual-plus-spouse plan as a special qualifying event. You may lose any deductible you’ve paid if you switch plans mid-year, but the cost savings will often provide a compelling argument for switching.

Next, consider short- and long-term disability policies and basic and supplemental life insurance. These policies act as income protection tools. If one partner cannot work or passes away, the other can still meet financial goals, like paying off a mortgage or funding college savings. If your coverage is insufficient, you may be able to explore additional options through your partner’s company.

Lastly, company equity, whether from a private or publicly traded company, can be a significant wealth creator. It should be considered as long-term capital, but those funds can also help fill savings buckets if you have short-term financial needs. Understanding how company equity supports your joint lifestyle and combined expenses is essential. Diversifying or reallocating might be worth considering as part of your broader financial plan if a significant portion of your wealth is tied up in company stock.

#7 Create an Estate Plan

Estate planning might not be the most exciting topic and not one that newlyweds want to talk about! Still, it’s one of the most crucial discussions you can have as a couple — even if thinking about “what if” scenarios is uncomfortable.

First, ensure you have a last will and testament. A will is a legally enforceable document that outlines how you want your assets distributed upon your passing and designates an executor to handle these affairs. In many cases, couples opt for a reciprocal will, where everything goes to the surviving spouse. However, if your situation is unique, your will should reflect your wishes.

Beyond the will, consider appointing each other as powers of attorney for healthcare and financial decision-making. These documents allow someone to act on your behalf if you’re incapacitated, and they must align with your overall estate plan. Additionally, advanced medical directives can ease the burden on your healthcare power of attorney by outlining your preferences for life-sustaining treatment in specific scenarios.

As life circumstances change — whether through marriage, the birth of children, or financial shifts — revisit and update your estate planning documents. Consider setting up a trust to provide governance over a pool of assets, ensuring they’re used according to your wishes.

If you live in a community property state like Washington, assets earned during your marriage are generally treated as community property. However, if properly managed, inheritance and assets in a trust can be kept separate. In some cases, a prenuptial or postnuptial agreement might be worth exploring to protect these assets.

Finally, ensure your beneficiary designations on individual accounts, like retirement or life insurance, are up to date and align with your estate plan. These designations override what’s stated in your will, so they must reflect your current wishes.

#8 Tax Considerations

There’s a common belief that getting married will drastically change your tax situation. Your tax bracket may not shift significantly if you and your spouse have similar income levels. However, there are efficiencies to be gained by moving from single to married filing jointly.

For instance, the standard deduction for a single filer in 2024 is $14,600, but as a married couple filing jointly, you can double that to $29,200. This might open the door to itemizing deductions, including unreimbursed medical expenses, state and local taxes (SALT), mortgage interest, and charitable contributions. In high-tax areas like Seattle, where property taxes can add up quickly, you might reach that SALT cap of $10,000 faster than you’d think. These are all areas where itemizing could lower your taxable income, so it’s worth conversing with your CPA to see what makes sense.

Beyond itemized deductions, there are other tax strategies to consider as a couple. If you’ve combined health care plans and have a high-deductible plan, you can contribute to a Health Savings Account (HSA) at the family level to defer some earned income. If one spouse isn’t working or has a lower income, spousal contributions to an IRA can also be a potential deduction. Additionally, there are additional tax credits that you may qualify for jointly. Contributing to a 529 plan can also offer state income tax benefits if you live in a state with income tax.

If your financial picture includes inheritance or family support, the tax implications of receiving or giving gifts might be a concern. Generally, receiving gifts is tax-free, but giving gifts is where it gets nuanced. The IRS allows you to give up to $18,000 per person per year without triggering a gift tax, and as a married couple, you can double that to $36,000 per person through gift splitting. However, remember that certain payments, like tuition or medical expenses made directly to an institution, can also be made on someone else’s behalf to give more than the annual exemption amounts stated above.

Bringing it all together

Building a solid financial foundation before marriage can make all the difference in feeling secure and aligned as a couple. By talking openly about your finances, defining shared responsibilities, and crafting a plan that reflects your goals, you’ll create a financial roadmap that works for both of you. You don’t have to do everything all at once, but starting a conversation and focusing on the steps above is a great starting point for getting organized.

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