Getting married is an important step and the start of a new phase in your life. But it may also be the start of a new burden, financial responsibilities among them. These financial planning tips for newlyweds will help you understand how marriage affects your financial life and what to do about it.
1. Communication is Key:
After marriage, newlyweds often ignore conversations about money. But communicating clearly about finances is absolutely necessary for a healthy marriage.
If you do not express your concerns and expectations at the beginning of the marriage, you can be stuck with compromises and disappointments for years to come. Due to this, it is vital to address financial issues before walking down the aisle.
Key points to incorporate in your communication about finances can be saving and spending habits, asset and liability management, and debt obligations to name a few.
2. Saving for the Future:
When you get married, your financial outlook changes. You should take some time to review if you are on the right track with your savings, investment and retirement planning.
It is absolutely crucial that newlyweds have a discussion about the money they are putting away each month and for what purpose it is being put away.
Getting married signals that these funds will be dedicated to your financial security in the future.
This does not mean that some funds can’t be used for short-term investments or in activities that will help you for extra cash flow in the short term while planning for retirement down the line.
3. Consolidate Assets and Remember to Account for Liabilities:
Consolidating your debts can help reduce the burden on you as well as your spouse. Having a debt consolidation plan will also protect you from being hounded by creditors.
A good way to start dealing with your debt is to figure out which types of debts you have and which ones can be consolidated.
Paying down debts that are unsecured or high interest should be your first priority because they are likely to have the highest collection fees.
Those who live together after getting married would benefit from a debt consolidation plan in order to avoid huge penalties and red tape when trying to pay off debts owed after divorce.
You need to figure out as a team how to manage your assets as well as how much you can save for retirement and emergencies.
When you create a household budget, both of you should discuss where to spend and save. This way, both of you will find a balance that works for your financial situation.
4.Create a Budget That Works:
If you are trying to set up a budget, the best way is to figure out what each of you spends on various things. This includes rent or mortgage, groceries, clothing and entertainment.
You can then create a monthly budget based on your income and the expenses that you identified.
When creating a budget, try setting aside a certain amount each month for entertainment or other discretionary spending (without going over the amount you are saving for retirement).
That way, both of you will feel like you have saved some money towards your financial goals.
5. Create an Emergency Fund for a Rainy Day:
Creating an emergency fund is one of the most important things you can do for your financial security after marriage. A rainy day fund will help you and your spouse in case of a car breakdown, job loss or some other unexpected expenses.
You should try to save up enough money to be able to cover expenses for at least three months if you or your spouse loses their job.
If that is not possible, then at least try to save enough money for one month so that you won’t have to keep relying on credit cards if something happens.
6. Get Adequate Insurance:
If you know that you are not good at saving money, then get adequate insurance on the house, car or other important things that you own.
This can help avoid you from making any big financial mistakes and it can also be a lot of fun to score discounts at the end of the year if your insurance is paid up.
7. Decide and Prioritize Financial Goals Together:
When you are married, it is important for both of you to have a mutual vision of what your financial goals are.
Trying to be financially independent from your spouse will likely lead you both to make different financial mistakes and it will also lead to the destruction of the marriage if your spouses expectations are not met.
If you and your loving partner have different visions of what goal should be prioritized in terms of budgeting, then make sure that both of you are willing to compromise and consider each other’s concerns.
Also read: Questions To Ask Yourself Before Investing
Bottom Line:
Planning your finances after marriage is not an easy task. But it is one that needs to be done in order for you to keep your marriage strong and healthy.
Financial success as a family can help newlyweds deal with many of the challenges that come with married life like unexpected financial expenses, career changes, having children and so on.
Having a healthy relationship with finances is important for both you and your partner. The success of your marriage depends largely on how well you plan financially together.