Money is a major part of your life, and once you get married, the way you handle your finances is going to be a critical part of your relationship. This post sheds light on a number of tips for managing finances as newlyweds.
1. Talk About Your Financial History
Open communication helps couples compromise and avoid disputes over time. Therefore, understanding your partner’s salary, debts, credit score, assets and, most importantly, their financial goals and aspirations are important. There are many reasons to why this is important. For example, while applying for a mortgage, a credit report is run on both partners. This means that if your spouse has poor credit, you might have to pay the consequences.
This discussion helps you set a strong foundation for creating your financial goals. This also can be a tough discussion to navigate, some good questions to ask are listed below:
- How much debt do you carry?
- How much money do you have in savings?
- Are you saving for retirement?
- How do you think, feel and act when it comes to money?
- What are your spending habits like? (i.e., Do you tend to overspend or are you more cautious?)
- Do you stress too much about money?
When taking this essential first step, it’s crucial to listen without judgment in order to gain a clear understanding of your partner’s financial situation.
2. Set Joint Goals
Once you have an idea of where you and your partner stand financially, you can move onto goal setting. Maybe it’s your dream to buy a home, have a family or to travel together in the future. Whatever your aspirations, it’s important that you articulate them, set a timeline for achieving them and map out the financial steps it will take to get there.
When you both decide and understand on the financial steps to take, the likely you and your partner are to commit to the goals set out.
3. Continue to be Transparent About Money with Your Partner
When sharing your finances and your life with another, it’s important that you continue to be transparent about money with your partner and that means telling your spouse the truth and continuing to do so throughout the relationship.
Hiding money secrets is not productive. Relationships are built on trust, and violating that trust is not only bad for the relationship but unfair to your partner.
4. Build an Emergency Fund to Save for Unexpected Expenses
The unexpected can occur anytime. This can be such as car repairs, or cover living expenses when the loss of a job or an illness affects income. Building an emergency fund, helps your relationship establish good money management habits and avoids using unnecessary credit.
Many financial experts recommend setting aside enough money to pay your living expenses for at least three to six months. Although income, responsibilities, interests and personal needs affect savings habits, setting aside a fixed amount of money each pay is a good start.
5. Life Insurance
Once you and your spouse begin taking on shared debts, like a mortgage or auto loan, you both become responsible for making those payments even if one of you passes away, and could lose your car or home if a loss of income prevents you from paying the bills.
A life insurance policy guarantees you can support each other financially, even when you one of you passes away. Many couples start to seriously consider buying a policy when they’re planning to have children, but buying a policy soon after you marry allows you and your spouse to start making a financial plan for the rest of your lives together, including any major purchases or additions to your family, and will most likely save you money long-term.
With trust, communication, love, and some smart planning, you and your spouse can have a marriage devoid of any money-related conflicts. If you’ve been putting off getting advice about how you can solve your debt problems, get in touch with us today!