Tying the knot is a momentous event, adorned with fun-filled activities such as showers, rehearsals, the wedding itself, and the honeymoon. However, amid this whirlwind of events, couples often overlook one significant aspect: their joint financial management. Imagine if you’d invested as much energy in planning the finance as your wedding; it would immensely help your financial health.
Here’s some practical financial advice for those newly hitched and yet to uncover the potential challenges of combined finances:
1. OPEN UP TO EACH OTHER:
Firstly, it’s crucial to be totally open with your partner about your debts, savings and retirement funds. Discuss every aspect of your financial life, the pleasant and unpleasant ones. No one appreciates unwelcome surprises, especially after they’re married. Open communication about your financial position lets you start off on a clear slate.
2. INITIATE A FAMILY BUDGET
Once you’ve shared financial details, begin a healthy practice of tracking your income and expenditures. Starting early ensures a smooth journey later, readily revealing spending patterns and simplifying budgeting. With two people now contributing to the same checking account, it might be tempting to indulge, but resist the urge to splurge. The last thing you’d want is to live from paycheck to paycheck early in your married life. Establish a realistic budget that accounts for every dollar earned.
3. TRY LIVING ON A SINGLE INCOME
As you’re now a dual-income family, experiment with living on just one income. The goal is devoting one entire income to savings. If you can manage to pay regular expenses from one income and save the other, it would dramatically boost your savings. This strategy is also beneficial to clear existing debts. This plan will also be convenient if one of you wants to become a stay-at-home parent in the future.
4. ALIGN FINANCIAL GOALS
Within a marriage, having shared financial objectives can help you work collaboratively. If your retirement plan conflicts with your partner’s desire to earn and travel now, it could lead to financial disruptions. Share your financial aspirations with each other, devise a budget to allocate resources to each, and achieve them easier and quicker.
5. SET ASIDE FUNDS FOR FUTURE CHILDREN
Planning to extend your family? Start a savings account to cushion unexpected costs related to having kids. With funds dedicated to this cause, you can enjoy the blissful phase of parenthood without financial stress.
6. BE PRUDENT WHEN INVESTING IN A HOME
It’s common for newlyweds to invest in a new house, but it may not always be the best choice for you. If there’s uncertainty about job locations or career paths, continue renting. However, if buying a home is an option, remember that taking a mortgage is a big step. It’s understandable to want your first house to be your dream house, but life is unpredictable. A lavish home in a plush neighborhood or a modern house with fancy decor may not be the wisest choice. Choose a house that suits your needs, fits your budget, and brings you happiness.
Effectively managing money might not come naturally to all, but with open financial discussions, controlling spending, and proper budgeting, you’ll overcome potential financial hurdles. Skills like living on a single income or planning for significant family events contribute significantly to your joint financial growth.
Were you transparent about finances in your marriage from the beginning, or did you face unexpected challenges? Share your stories with us. Turn to SmartAsset.com for more tips and insights.
