Marriage is not only sharing the home! In all form of marriage, the couple promises to share happiness, sorrows, and responsibilities. But sharing financial life is always left behind and no one talks about it.
Sharing finances between couples is a very important thing and has equal importance as that of sharing happiness and responsibilities.
Most of the married couples often fight over money. Why? The reason is, couples appear not to share their finances and don’t have a common financial goal. In this article, we will be providing financial advice for the newly married couples so that they can have a happy financial life ahead.
Financial Advices for the Newlyweds
Discuss Finances Together
Communication gap is the biggest gap between two individual. It leads to many misunderstandings and can spoil a relationship too. Finance is a topic on which everyone is not comfortable to talk on. But when you are a couple it becomes important to discuss things and take a collective decision with your spouse about everything including the finances.
Money can symbolize different things to different people and if you sit together and discuss, you will definitely end up with a better result. It is important for both the partners to know where both are financially and where they intend to be in the future.
Instead of waiting for years to get to know each other, such discussions on money should happen soon after marriage. Sooner the discussion, easier it will be to manage. Once married, there is no such thing like his debts and her debts, instead it is “our” money and “our” debts.
Set Financial Goals Together
Discussion on money will help both of you to know and understand each other better. The obvious next thing to do will be to finalize both the long term and short term goals. The couple will need to then mutually agree on the set goals and the contributions that it would require. In general, the couple should make yearly, 5 years and 10 year and retirement financial plans/ goals.
The goals can include different activities, phases of life such as international trip, having child, buying a car or bike or even owning a house, cost of education of the kids and the social and family functions.
The goal should also include decisions on investment, savings and emergency funds.
Also, make sure that there is enough money kept aside for personal needs as well. Nobody would like to give count of every penny spent. An amount up to 5% of each person’s salary should not be included at all for any expenses. Instead this amount should be set aside for personal uses only.
Decide on Bank Accounts, Credit Card(s) & Existing Investments
It is normal for both the man and wife to have their own bank accounts, credit cards and on-going investments before the marriage. These might have been the need or justified before the marriage, but some of these might help save money while yielding the same value if merged post marriage.
Each partner, instead of having their own credit cards can agree to have just one credit card and one add-on card. This will provide liquidity option, while preventing debt to build up on both the partners.
Similarly the couple may also opt for a shared/joint savings account so that the money remains available to both of them.
As regards investment, there are insurance policies available for the couples, which give better cover options rather than individual policies.
Hence, it is critical to decide on these and choose the best options available in each case.
Build an Emergency Fund Right from the Start
Emergencies don’t announce their arrival and they mostly hit when they are least expected. Hence an emergency fund should be the top-most priority before anything else.
Usually, 10% of the combined income should be kept aside as an emergency fund month on month.
Make a Budget & Stick to It
An ideal budget will always accommodate the following in it:
- Total fixed monthly income.
- Total fixed monthly expenses.
- Emergency Funds.
Bur, just making a budget is not the end of managing expenses and debts. Couples should strictly stay close to following the budget and also track the same. The spending allotments should be rightly maintained plus it is necessary to adjust according to expenses, situations as well as income changes. Have a monthly spreadsheet to track if you are in-line with your budget or at least a small book to record the expenses. This way controlling the expenses will be quite easy.
Monitor your budget and expenses for the first couple of months and see if you are able to stick to the budget, else do a thorough scrutiny and try to understand what is lacking. Most of the times, the lack will not be money in itself, but could be controlling expenses that are out of budget.
It’s never too late the start saving for retirement, neither it is ever too early for the same. The earlier you start; quicker you might be able to relax. Plan for future, for children education, and also at the same time save bit by bit towards retirement. Contribute towards this as much as you are able to afford.
Additional contribution need not be in great amount. Even a small contribution every month can pile up to big savings during retirements. Moving aside a small portion will not be very difficult and might not impact your monthly expenses much, but in the long run it will be definitely turn out to be a good savings through the little amount that you kept aside.
Plan Should Be To Stay Out Of Debt – Always!
A plan to gain debt(s) over time is never a good plan. The plan should always be to end the existing debt(s) and take things forward in such a way that no debt is ever required to gain anything.
Living debt-free life might not be a luxurious life from the financial point of view, but it will definitely helpful from marriage stand-point. Thus, try to have minimal debt at least for the first few years of your married life, and never again for the rest of the life.
Trust Your Partner
Successful marriages are based on trust. Trust plays a vital role. With trust in place, everything else will also fall in place.
Money management should not mean one person taking complete responsibility; instead it is all about sharing what is earned in the best possible manner with mutual understanding.
Both the partners should refrain from asking for an explanation for petty spending. Everybody needs personal space when it comes to time, money and freedom.
It will feel uncomfortable to start a marriage with such discussions. But, there is no right time to start talks about money. The sooner you start, the easier it will be to manage.