Marriage is a life-changing adventure for anyone. But with marriage comes the financial responsibilities of cohabitation. How you manage your money as a couple dictates how your life will be.
Financial planning is a must for any pair of newlyweds. Many crises are averted through clear and open conversations about money. But where do you begin on the road to financial stability in marriage?
What are your financial priorities?
Even before your wedding, have conversations about your priorities already. These candid discussions allow you to be transparent about your concerns. They also show if you agree with your beliefs and principles.
Ask yourselves: In which areas do you want to allot most of your finances during this point? How much are you open to spending and setting aside for savings and investments?
Remember that there is not only one way to arrange your priorities. It is also not impossible to have disagreements. The important task is to reach a compromise that you are both comfortable pursuing for this season of your married life.
What are your financial goals?
While financial priorities are about where you will be using your money in the present, financial goals are what you envision yourselves accomplishing in the future. Being on the same page spares you from stress and arguments.
These long-term goals can be about the kind of home you want to live in or if you want to reside in another state or country later on. To help you form a fuller picture of pursuing these hopes, seek advice from a financial consultant. They will help you sort through your goals and devise an action plan based on your current financial status.
Are you bringing assets and/or debt with you?
Both of you have personal assets and liabilities that will be your spouse’s responsibility, too, upon your marriage. Share these with your partner because they affect spending capabilities and future investments.
Do you have a savings account or personal insurances? Are you still paying off student loans or credit card debt? Lay these out clearly.
What you and your partner bring to the table upon marriage will be the foundation upon which your financial priorities and goals will stand. Transparency, however uncomfortable, helps you build a stabler edifice.
How to Combine Finances
In addition to communication, trust strengthens your marriage. Bringing your personal money together is a big step, so here’s how to do it successfully.
Open a joint bank account.
One of the biggest displays of trust is opening a joint bank account with your spouse. This will make it easier to manage your usual expenses. Ideally, you should open a different checking account and savings account.
Remember that a joint account gives your partner full access to the money in it. This means they can deposit, withdraw, or close the account without the need for your consent.
Create your regular budget.
Your monthly budget depends on the financial priorities and goals you set at the start of your marriage. These are bound to change over time because they will evolve along with what is important to both of you now and in the future.
Aside from household expenses and savings, set aside money for an emergency fund. It may be better to open a separate bank account to avoid accidentally spending the money on other matters.
Another good tip is to use your credit card for regular expenses to maximize your provider’s point system and other perks. Just make sure that you will only use your credit card for purchases that you already have money to prevent debt.
Getting insurance is an essential step in adult life, and all the more so in marriage. Insurances safeguard your finances should unexpected events occur.
You have the decision to get separate life insurance or buy a joint policy, although individual plans are usually more affordable, customizable, and provide better coverage. Consider a joint policy if you or your spouse cannot get one due to health issues.
If you have children or are considering having children someday, insurance policies help secure their future. Invest in their lives by getting a policy that will help pay for their tuition fees from childhood until their college years.
Don’t let money become a point of conflict for you and your spouse. Agree on what’s important to you today and maintain each other’s trust. Financial security becomes more achievable when you are working towards the goal together.