Don't let financial issues cloud your new marriage. Use these eight strategies to give your "newly married couple" status a financial footing that will help you better plan for your future and stave off common issues faced by people joining their lives together.
Do you have debt your spouse doesn't know about? It's essential to begin a marriage on a solid foundation, which means honesty. Being upfront about your finances will improve your communication as a couple and your financial future.
You won't be able to tackle past issues without knowing what you're facing now. And without knowing your assets and debt, you'll never have an accurate plan for your future. So, it's time to come clean: Get both of your financial pasts out in the open so that you can go into your union with a complete picture.
One partner may pinch pennies, while the other doesn't let cash hit the savings account. Enter your marriage with some fair expectations of how you plan to deal with your financial matters. This allows the couple to avoid arguments early on and allows both parties to adjust their expectations to reality. Couples need to communicate their attitudes and thoughts about saving, spending, and making money, so that they can compromise together on a plan for their married life.
With the past out in the open and your expectations set, you can now work together to craft a budget. An agreed-upon monthly budget — created with actual income and expense figures (and detailed before your wedding day!) — puts you on track with your new spouse following the "I dos."
Budgeting for couples is a crucial step. Keep an open dialogue flowing about your budget. Work together to adjust it where needed, and be willing to make changes. Having a budget can help protect you from unwise overspending, whether that means setting up your new home, handling your entertainment expenses, or making travel decisions.
With your budget set, someone's going to need to pay the bills. A joint account gives both people visibility into income and expenses. Some couples like to keep separate accounts for agreed-upon discretionary spending, but if you can't share money with your spouse, it can make it challenging to work together on your larger financial plan.
Who is going to set up that joint account? And who is going to pay the incoming bills? Having a plan in place can prevent confusion (and late fees). Plus, look at your small expenses to ensure you're not double paying. Is a joint cell phone plan a better option? Can you consolidate streaming accounts? Work together, from the small stuff right up to the significant decisions.
Just like with a budget, finances aren't a one-time discussion. Maybe you've agreed that one partner will focus on the bank accounts and pay the bills, but they still have the responsibility to keep the other partner informed. Sure, you may be the one tracking the budget and paying the taxes, but keep your spouse abreast of the financial situation and in the loop about decisions on credit cards, bank accounts, and more. Essentially, keep the financial conversation alive and continuous.
The sudden combination of two paychecks may entice a newlywed couple to spring for more house than they can realistically afford, especially as life circumstances change. Whether it's a fancy car or a home outside your budget, don't get carried away with major purchases that cramp your ability to be flexible down the road, whether with having children or changing your lifestyle. Spending an unproportionate chunk of your income on a home mortgage could compromise your budget for having kids, returning to school, starting a business, and many other opportunities a young couple may have.
Where do you want to be as a couple? And how do you plan to get there? If you agree you want the flexibility to move anywhere in the world, then locking yourself into a big mortgage may not make sense. If you decide to stay in your hometown and raise a family, should you buy a small place and build equity? You must plan for the short-term with your monthly budget and have a bigger plan for the long-term.
Here are some long-term decisions to discuss:
If you're a young newlywed, life insurance may not be the first thing you think of when it comes to your financial planning. But getting married is a great time to plan for future needs, such as life insurance. Not only does opening a life insurance policy at a young age offer you the most affordable options, but it also ensures, in the event of your passing, that your future goals as a couple can still be met — from providing for your children to paying off a mortgage. At Ethos, you can scope out your options for life insurance online and apply today for coverage.