Managing one’s finances is challenging. Making both ends meet is not easy. Imagine how much more complicated managing finances becomes when we get married and have to merge our our expenses with those of our partner? For newlyweds, this is an inevitable reality. Tackling money matters before exchanging “I do’s” is imperative. Newly married couples need to have conversations about important and sensitive topics including monthly budget, income, and who will be responsible for various aspects of the finances. Since poor money management can take a toll on a marriage, there are things you can do together to properly manage your joint finances. Here are some helpful tips:
Have an honest discussion about your finances
As a couple, when you discuss your future plans, goals, and visions, don’t forget to also discuss your finances. Start with expectations of each other’s spending habits. How did your respective upbringings influence how each of you approaches money? It’s okay to have differences, there is no need to panic. What matters most is that the two of you are able to meet halfway and set mutually agreed upon expectations.
When moving into a new home, sit down together and determine your expected income and monthly expenses. Decide how you will allocate responsibility when it comes to monthly bills. Talk about how both of you will manage your purchases, paying for utilities, and other life expenses. Be honest with each other about your financial situation and try to look for ways to help each other out if needed.
Talk about your financial goals
A lot of married couples fight over money because they’re not on the same page in terms of their goals. Take time to sit down and talk to your partner about your short-term and long-term financial goals. When do you plan to retire? What investments are you planning to make? Do you want to invest in a house or property? Are you thinking about buying a new car in the next year or two? Would you like to save up to start a business?
No matter the goals and whether they are short-term or long-term, these things should be discussed openly and honestly with your spouse. Come to an agreement about how to prioritize each of your goals and determine the steps needed in order to achieve these goals.
Create a budget
Creating a budget and sticking to it is another essential thing married couples should do. This is important to ensure that all monthly expenses are covered without going into debt. This will also help you determine if you have room for savings and other extra expenses.
Be sure to create a record of the things on which you spend money. It helps to classify these expenses into categories such as food, utilities, entertainment, loans, etc. Calculate the total for each category and see if this amount is in line with your income. If you have a tight budget, consider which of these items can be removed or figure out which areas where you can cut back. Also, don’t forget to make room for emergency or irregular expenses such as doctor’s appointments or car repairs.
Discuss big expenses
Part of managing your money responsibly is making careful decisions before making a big purchase. When you’re married, this is something that should be discussed with your spouse, especially when it involves a purchase that will affect the overall household budget. For example, if you’re planning to buy a car or invest in a property, this decision needs to be something that both of you agree on as a sign of respect for one another. You may also consider setting a threshold about spending. For example, each of you can spend on anything that doesn’t exceed $1000. Anything above this agreed upon amount should be discussed ahead of time to avoid unnecessary fights over money.
Plan for your retirement
Whether you’re married or not, planning for retirement is a must. It’s crucial that you are financially prepared for your retirement years. How do you and your spouse picture your retirement? What are your goals? How do you plan to spend these years?
Next, create a plan on how you will save up for your retirement. There are several options you can consider like taking advantage of a 401k Plan or opening a savings account solely dedicated to retirement. If you want to grow your savings fast, consider opening an account in a credit union where interest rates are much higher.
Money management isn’t easy, especially after tying the knot. With the help of these tips, you can overcome this hurdle and handle your finances like a pro!
For more helpful tips on financial management or to learn more about opening up a savings account, please feel free to visit Calcite Credit Union.