How to get your married life off to the right financial start

After all the excitement of a wedding and honeymoon, you will likely want a bit of down time once you’ve come back down to earth. But before you get too comfortable and crack on with the rest of your life, the early days of your marriage are also the ideal time to start talking about your joint financial plans.

Marriage isn’t just an emotional union; your finances will come together too. And even if you’ve been together years and jointly own a home, marriage can change both your outlook and your tax position. Then there’s the fact you might have different attitudes towards money, which can become a bone of contention over time if you don’t tackle them head on.

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So, what do you need to do to ensure your marriage gets off to the right financial start?

1) Deal with your debts

The average wedding costs a hefty £18,400, according to Hitched’s National Wedding Survey 2022, so if you borrowed any money to help you foot the bill, or put your honeymoon on your credit card, you will need a plan to pay it off. It’s hard to start saving for the future when you still have debts to repay.

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Low-cost personal loans can be a helpful way of spreading the costs, but if you’re using credit cards you need to manage your repayments carefully. If you have a 0% card, make sure you clear your bill before the interest-free rate runs out. If it’s not, transfer your balance on to an interest-free deal, if you can.

2) Plan for the worst

Nobody likes to think about death, and while we all know it’s coming, it’s a sad fact that it comes too soon for some. This means you need to take the time to discuss how each of you would get by financially if either of you died (or became seriously ill). Taking out life insurance and critical illness insurance can provide you both with peace of mind.

It’s also important to make sure you have written wills. Simple mirror wills (where the will is the same for each person) work for many couples, but if you have more complicated family circumstances, such as children from previous relationships, it’s a good idea to talk to a solicitor.

3) Sort out your savings and investments

It’s important to make sure you’ve got an emergency fund between you with three to six months’ spending in an easy access account. That way you won’t have to borrow or raid investments if the boiler dies, or if either of you loses your job.

It’s also a prime time to review your investments and ensure that - between you – you aren’t paying more tax than you need. Each year you can both shelter up to £20,000 from tax in an ISA, so if one of you is maxed out and the other isn’t, it’s worth joining forces and sharing allowances.

Drastic cuts to the capital gains tax (CGT) allowance mean more investors are likely to be stung by the tax in years to come. In April this year the allowance was cut from £12,300 a year to £6,000 and its scheduled to drop again to just £3,000 next April.

However, savvy couples might be able to avoid a looming CGT bill by gradually transferring gains from investment accounts into ISAs, using a process known as ‘Bed and ISA’. This involves selling investments, that aren’t currently sheltered from tax, within your CGT allowance and immediately rebuying them within an ISA.

It’s also important to know that transfers of assets between married couples are free of CGT, opening up more opportunities to mitigate an impending tax bill.

4) Talk about your financial priorities

If you’ve just got married, your future plans are likely to be a hot topic of conversation. What sort of holidays are you planning? Do you have plans to move house or renovate your current home? Are children on the cards and if so, when?

But rather than just talking about your future life, if you want it to be anything more than a pipe dream, you will also have to think about how you will fund it. Setting goals is proven to focus the mind and once you have put in place a plan, you are much more likely to achieve it, than you would if you just amble through life vaguely expecting things to change.

If you’re planning to have children, for example, and want to send them to private school, the sooner you start planning for school fees, the more likely you will be able to afford it when the time comes.

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Discussing and planning shared goals is undoubtedly a great way for couples to come together. The catch though, is that you won’t necessarily have the same financial priorities. With many couples, there will often be one who prefers to spend and another who wants to save. One might want to give their children everything they never had, the other might want them to stand on their own two feet. However, by talking about what matters to you (and why) when you first get married, and finding ways to manage those differences, the chances of them causing problems further into your marriage are substantially reduced.

5) Schedule time to talk money

Although some couples will find it easy to talk about money and find it comes up naturally in conversation, many won’t. If you’re in the latter camp, it can help to schedule a regular time to talk all things money.

This can cover anything from discussing any major expenses you might have in the pipeline, to whether you should be paying more into your ISAs. If you need to save some more money to pay for a holiday or deal with rising bills, it will always be easier to do, if you can work out how to cut your spending together.

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A “financial date night” might not be the most romantic of evenings, but it can work wonders for your financial security and your marriage.

What about older couples?

It’s important that all couples talk about money and plan their finances together, but for older couples the conversations can be especially important. It might not be the first marriage for either of you and there might be more “financial baggage” to deal with. There may well be more wealth to manage, multiple properties and children’s needs to address.

You might have the additional challenges of preparing for an imminent retirement together or need to work out how your combined pensions can best serve you both.

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These conversations will likely be challenging and your finances may not end up as combined as younger couples. Nonetheless, it’s still important to discuss your goals and your priorities together. But you don’t necessarily need to have all these conversations alone - a financial adviser, for example, can help you come up with a financial plan that works for you both, while legal advice can be invaluable in ensuring that your wealth is distributed as you wish when you die.