All couples promise “for better or for worse… for richer or for poorer,” when they marry. However, it can be a challenge to actually survive being richer or poorer without financial management skills. Money quickly becomes an issue over which newlyweds end up fighting, especially if expectations have not been openly discussed before saying "I do".
Openly discussing and agreeing upon your finances together is important because it is such an essential ingredient to a long and happy marriage. The following tips can help you and your spouse get accustomed to healthy financial habits:
Talk About Finances
Communicating your thoughts about spending is best to do before you get married. However, it’s never too late to talk about your finances with your spouse. In the event that you failed to discuss the topic before your marriage, you should discuss the matter as soon as possible with your significant other. You will have to go through the accounts you have open and the debts you owe. You should also be clear on how you would like future money to be handled, and then listen to your spouse for their suggestions. Together, you will be better equipped to make any changes that you both agree on.
Determine the Goals
Once you come up with your baseline financial status, discuss the long-term financial goals that you might have, such as retiring at a certain age or paying off your debts completely. Make sure that you write down your goals and review them regularly. By doing so, you will have a better chance of success.
Joint v.s. Individual Bank Accounts
There are ups and downs of having a joint bank account as well as maintaining individual accounts after marriage. Some may even opt for both types of accounts. By combining your accounts, you can simplify your finances and develop trust in your marriage. It can also benefit you and your spouse if either one of you chooses to take on the extra household or child rearing duties. Having some independence may be preferred by the both of you.
Make saving for an emergency fund one of your top priorities. Aim for saving at least six months of your household expenses for emergencies. It should be a priority because an emergency fund can bring security and help protect your relationship if some disaster or mishap arises, such as a serious injury or job loss.
Make sure that you stay within a budget each month. Limit how much you can spend on a certain budget category in a month. You should do so by reviewing your joint expenses for a few months to understand how much you and your spouse have been spending, and whether you need to reduce the amount. Once you have done that, you can establish a limit on every category that you decide on. Don’t forget to allocate some funds for surprise events.
Keep Track of Your Budget
Making a budget is a great step, but it isn’t enough. You will also need to make sure that you are staying within your spending limits and adjust your spending accordingly. An effective way of sticking to your budget is by using an envelope budgeting system. This method is best suited for young couples who have lower incomes. Another way is to make a spreadsheet that will track all of your expenses, spending, and totals up at the end of the month. Also, make sure that you pay off your credit card charges every month on time. Constantly communicating with your spouse about the budget will help you both keep track of your budget and avoid overspending. Never assume the other person took care of it, or that the other person is staying within the budget. It is better to ask and confer with them so you both stay on the same page.
Get Out of Debt
Being in debt can be damaging even for a single person, but it becomes a double threat when two people have to pay it off. Work out a plan with your spouse for getting rid of your debt and making sure you do not get back into it. If one or both of you have extensive debt it maybe helpful for you to speak to a representative of your credit union to help you create a workable plan.
Many marriages are affected by money problems, and unfortunately those problems can stay with them for a long time if proper measures are not taken. It is important for newlyweds to work things out in their financial lives to avoid any conflict. The best way to do so is to talk it out with their other half and plan a financial strategy together.
Want more tips on budgeting before you get married? Check out this video from KIMT News 3.