The joy of finding ‘the one’ you want to share your life with is near-unparalleled. The run-up to a wedding and the ensuing honeymoon is all about dizzying excitement and dreams of a rosy future together. However, the actual marriage begins after this exhilaration settles down. That aspect of togetherness isn’t so much about date nights and candle-light dinners as it about grocery shopping, chores, and responsibilities. This requires a fair share of adjustments, including that on the financial front. As your lives become intertwined, so does your money. That’s why financial planning for newly married couples becomes imperative for long, happy innings.
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Budgeting In A Marriage Is The Key To Success
When you were in a relationship, it was essentially all about sharing a happy space where you shared your hopes, dreams, fears, and aspirations. Perhaps, you went out of your way to indulge and pamper your significant other, even if it meant a slightly inflated credit card bill or feeling a pinch in your pocket for the rest of the month. However, those dynamics change once you tie the knot.
Now, you have to think about debts and assets, run a household, and build a secure future together.
Even so, discussing financial goals for married couples early on is difficult. Money is always a touchy topic. It’s awkward, it’s tense and it’s personal. Yet, it’s essential. To know why it’s so crucial, you need to understand how can financial problems affect a marriage. Statistics indicate that money becomes a contentious issue between a third of all couples. Another survey finds that monetary disputes are the root cause behind 21% of all divorces.
This is primarily because the two life partners can have extremely divergent views on financial management.
For instance, if one partner believes in setting financial goals for married couples and the other has a more live for the moment outlook toward life, it can lead to some serious differences. In such cases, having honest discussions and arriving at a compromise that works for both partners is the only way to salvage a potentially detrimental situation. That’s why budgeting in a marriage is non-negotiable. You should learn how to manage finances in marriage as early as possible.
Top 15 Tips For Financial Planning For Newly Married Couples
Building a financially secure future is a work in progress. One that bears the best results setting financial goals for married couples begins right from the get-go and is adhered to throughout the journey. So, don’t wait for big milestones like buying your first house or starting a family to start exploring money and marriage tips.
Make the most of these 15 effective tips for financial planning for newly married couples to stay on track for your long-term and short-term financial goals:
1. Be on the same page
Before you start exploring how to manage finances in a marriage, it is important to get on the same page about your goals and expectations. Some of the key questions to address right at the onset are:
- How much should a couple save per month?
- Who should pay the bills in a marriage?
- How to build assets and manage liabilities?
- Which financial products to invest in?
- What are the accepted rules of spending?
In addition to this, also transparently discuss salaries, spending habits, bank accounts, and opening joint accounts. This will give you a broad structure to work with, and you can fill in the details as you go along.
2. Discuss budgets
Budgeting in a marriage is a key aspect of financial planning. It helps in ensuring that you don’t err on the side of living beyond your means and swirling down the hole of a financial mess. So, as soon as you get back from your honeymoon, draw up a monthly budget keeping your short-term and long-term couple goals in mind.
For instance, if you want to buy a house in 5 years, you need to factor in saving up for that big investment. Then, create a budget that caters to your month-on-month short-term needs as well as this long-term goal.
Creating couples financial planning worksheet can be a great way to achieve clarity and transparency.
3. Begin goal setting
Discussing life goals plays an important role in defining financial goals for married couples. Given that you have taken the big leap of spending your life together, you and your spouse are bound to have certain shared goals.
At the same time, you’ll have mutually exclusive goals. It is important to discuss these things to be clear on which aspects you’ll be working toward as a couple, and which ones you’ll handle as individuals. Here are some things to factor in:
- Does one of you want an early retirement?
- Do you want joint investments or separate?
- Do you want to save up for a house or a world trip?
- Do you want to start saving for future children’s college right away or after you become parents?
4. Handling personal debts
In most cases, by the time people get married they have some or the other form of personal debt to deal with. A student loan, home loan, car loan, outstanding credit card payments, and so on. When drawing up your newlywed budget, discuss how to handle these debts.
Will your personal debts become household debts now? Are you and your partner comfortable with the idea of contributing to settling each other’s debts? Or would you prefer taking care of your own? Once this has been defined, work toward paying off this debt while learning how to manage finances in a marriage.
5. Educate yourself on marriage and taxes
Sound financial planning for newly married couples doesn’t just mean managing your money well. It also means leveraging the various tax and other financial benefits to optimize your financial standing. So, make the effort to educate yourself on marriage and taxes. These, of course, vary from country to country, and you may need expert advice to learn how best to leverage it. For instance, financial planning for newly married couples in India can benefit from the following:
- Claiming deduction of up to Rs 1.5 lakh for education expenses of two kids under Sec 80C of the IT Act.
- The same section also facilitates deductions on life insurance cover.
- Deduction of up to Rs 25,000 for medical insurance premium for one’s self and family, under Sec 80D.
- Avoiding property tax on more than one property by registering units in the name of the husband and wife, separately.
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6. Build an emergency fund
Unforeseen expenses can derail even the strongest financial plans, and that’ why setting up an emergency fund is critical for sound monetary health. Even more so in the case of newlywed budget planning, as you’re building wealth and financial security from scratch.
Set aside some amount each month to cater to emergencies such as vehicle repair, house repairs, illness or hospitalization, and so on. Even if you get by a long time without needing to use this fund, don’t cut back or use it up.
It will save the day for you in troubled times – and those hit every marriage at some point.
7. Start making investments
Making investments is pivotal for building long-term wealth. However, only and only if you make smart choices. That’s why financial planning for newly married couples must include research and discussion on the best investment plans that work for both the partners. From mutual funds to shares, gold to real estate, and even cryptocurrency, there are many different ways to approach investments.
Pick one that is most in line with your long-term goals and has the lowest risk factor. It is important to factor in your spouse’s thoughts before investing, instead of shutting them out with a ‘you know nothing’ attitude. If it turns out to be a bad investment, it can come to haunt your marriage in ways you cannot imagine.
8. Prepare for the worst
Things may be going great for you and your spouse right now but life can take a 180-degree turn in the blink of an eye. A job loss, an illness, disability, or death can destabilize your life at any time, and it is imperative to prepare for such eventualities right from the beginning. Even if it sounds too morbid or distasteful to discuss things like untimely demise or terminal illnesses right at the beginning of your marriage, it must feature in financial planning for newly married couples.
This helps ensure that you and your family are protected, at least financially, even in the grimmest situations.
9. Discuss how much to save
How much should a couple save per month? There is no universally correct answer to this question. It all depends on your circumstances, and factors such as:
- Your earning
- Your debts and liabilities
- The kind of assets you want to build
- The timeline for meeting your financial goals
Based on these, decided how much you should save every month as a couple, and each partner’s contribution to these savings. Also, it is worth discussing whether you want to work together toward common savings or divide your savings into joint and personal funds.
10. Who should pay the bills in a marriage?
This is a crucial question to address for financial planning for newly married couples. When both spouses are working – as is the case for most couples today – it cannot be presumed that the man of the house will bear the burden of household expenditures. Discuss who should pay the bills in a marriage and make sure you’re both honestly on the same page about it.
You can either split the finance to cover recurring monthly expenditures equally and use the rest of your earnings on savings, investments etc. Or one of the partners could take the responsibility of keeping the household running while the other uses their income in savings and investments. In this case, it is important to make sure that the person who is spending does not end up getting a raw deal if the marriage doesn’t work out.
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11. Place limits on monthly spending
If there is one item every newly married financial checklist should have, it is a limit on monthly spending. This is crucial because you and your partner are both still learning the ropes of running a household in conjunction. It is also possible that you’re doing up your house alongside, which comes with a huge risk of overspending.
A little self-discipline right in the beginning can save you from poor monetary habits and financial distress later on. When setting a spending limit, also discuss how much you can each spend on yourself in a month. Do you best to stay within these limits, month after month.
12. Stay organised
Newlyweds must commit themselves to stay highly organized to keep their finances on track. Carefully filing bank statements, receipts, payslips, bills, and more can be instrumental in making that happen. It can be mundane to keep up with this system but do not procrastinate. File things straight away as and when you receive them.
When you need to audit your financial status, you’ll be thankful for this habit.
13. Track spending
You may pride yourself on acing financial planning for newly married couples, with all the essential elements in place. However, creating a solid plan on paper is one thing and executing it in real life. That’s why tracking your expenditures periodically is a must for saving money successfully. Working with a couple’s financial planning worksheet, adding in all earnings and expenditures, as they happen – and maintaining your custom-made balance sheet – is the best way to do it successfully.
14. Consolidate your monthly expenses
Before you got married, you both had your own thing going on. Your own place, your own car, your own credit cards, your own Netflix, and Amazon Prime subscriptions. Now that you’re sharing a life and home, consider consolidating these expenses. It can be a small saving through one canceled Netflix subscription or a big one incurred by liquidating an asset such as a house or car. They all add up to sound financial health in the long run.
Related Reading: Love Conquers All But Sometimes Money Conquers Love
15. Get help
If both you and your spouse are not experts at financial matters and find yourself struggling with containing expenditures or finding the right investments, consider getting professional help. Work with a financial advisor to evolve your customised plan and then just stick to it.
Even though money is a touchy subject in most marriages, it is also one that holds the key to happiness and security. There are several ways in which financial planning for newly married couples can save them from a lot of trouble and uncertainty later in life. Communication, planning and transparency are the cornerstones that help you set sound financial goals and work toward them with success.