When you get married, you begin a new life that comes with new financial responsibilities. It's important that you and your spouse are on the same page about money. This can help you avoid conflicts that may damage your relationship. Financial issues can put a strain on a marriage, so it is vital that you navigate financial waters in a way that keeps both of you content. Following are six essential financial tips for newlyweds.
1. Create a Joint Budget
It's a good idea to create a joint budget that you can both keep track of and follow. Whether you keep your finances separate or combine them, sharing a budget will help you track your expenses and keep you both contributing fairly. List all income sources and expenses, such as rent/mortgage, utilities, groceries, insurance, and other spending. Work together to set limits and allocate funds for savings or investments. You can use budgeting apps or spreadsheets that you can share so you can both stay on top of everything.
2. Start an Emergency Fund
Every adult should have an emergency fund, but if you are married and/or starting a family, it's even more essential. You have someone else depending on you now, even if it's half of the partnership's financial responsibilities. You never know what unexpected expenses might come up, whether it's a job loss, car repairs, medical bills, or anything else. Open a savings account specifically for emergencies and add to it regularly. Make sure both you and your spouse understand that it is for emergencies only. If you feel that you need to tap into it, discuss it with each other first.
3. Don't Avoid Talking About Money
It's vital that you keep an open dialogue about money with your spouse, especially if there are issues that need to be resolved. You may be tempted to avoid the conversation, but don't.
"Discussing your finances can be a bit uncomfortable for many couples, but those who tackle it head-on will be better for it," says the ABA Foundation.* "Understand your partner’s financial goals and spending habits. While you may have different answers, this conversation can help you develop an approach to money management that works for both of you."
4. Plan for the Long Term
When you got married, you began a new future with your spouse, so plan for it financially. Managing daily expenses is a must, but you should also discuss long-term goals, whether it's owning a home, starting a family, retiring early, or just planning a trip. When you have shared goals, it's easier to work together to achieve them. You can break goals down into short-term, mid-term, and long-term. Create a plan together to meet each goal and figure out how much to set aside for each. You can even open separate savings accounts for different goals.
5. Avoid Financial Infidelity
Avoid financial infidelity. In other words, don't financially cheat on your partner. You must be able to trust each other with money.
"Financial infidelity occurs when a couple who has chosen to combine their finances lies to each other about money," explains Kate Anania at Investopedia.** "Examples include hiding existing debt, making large purchases without disclosure, or lying about spending habits. It can cause a rift between partners that can be difficult to fix. Coming clean and consulting a counselor to discuss the issue can help rectify it. Having a shared budget can also rebuild trust."
6. Manage Debt Together
If you have debt, work on managing it together. No matter if you're bringing your own debt into the marriage, your partner is, or you both are, consider shared debt at this point, and work together to pay it off. One or both of you may have student loans, credit card debt, auto loans, etc. Track it all together, and work to improve the financial situation for both of you. Develop a strategy to pay off high-interest debt first. If one of you has a better credit score than the other, look into refinancing or consolidating debt to secure a lower interest rate.
Getting married means taking on a life partner. Finances are a major part of that life, and it's critical that you both understand the responsibilities that come with that and are able to work together. Be honest and communicate. Work from a shared budget with shared values and goals. Plan for the unexpected and work toward financial security and stability. This will not only be great for your bank account, but also for your marriage.
** https://www.investopedia.com/articles/personal-finance/030716/managing-money-couple.asp