We make a promise to our spouse, when we pledge ourselves into marriage.
To be there for each other, “in sickness and in health, for richer or for poorer”, however many couples can’t quite figure out the “richer or for poorer” part in their vows. This mainly happens because poor money management skills begin to cause problems in a newly formed bond.
Revelations about debt, income, and bad spending can destroy a new marriage. Being responsible with your finances includes looking at how each of you view money and how you plan your spending together as a couple.
First you need to figure out what your priorities are:
They key to a healthy financial relationship is based on the two of you sitting down together and openly discussing your plans and goals in life. What does each spouse want in the future? Does your current financial state allow you to spend or save the way you want?
Discussing financial plan, will allow the both of you to understand each other, and how to plan to achieve your goals together.
- What kind of jobs do you and your spouse want to have?
- Think about your living arrangements for the long term?
- Do you want to buy a house?
- Planning on having kids? Want a small or a big family?
- What are your dreams? Together and individually? And how much will they cost?
Don’t worry if you don’t have all the answers, you’ll be re-evaluating your goals throughout your marriage. However, you must know where each of you stand.
Create a Budget
Focus on your individual and joint expenses, to determine what’s coming in? How much are you spending? What are your fixed and variable expenses? Once you determine your spending, it’s time to allocate how much amount you’re going to be spending on a particular category.
Follow the Budget
Creating a budget isn’t enough. You need to stick to it too. You need to make sure to spend according to what you had planned on each expense, and be certain that no changes are happening to your budget as you go along. In order for your budget to work, stay clear of any forms of loans and credit cards.
Joint and Separate Accounts
It’s also important to decide whether you’ll have a joint account, or separate accounts, or a combination of both. That way you can assign how your expenses such as gas, electricity, and water bills will be covered. Keeping a track of your finances will help you pay off your bills on time as well as increase your savings.
Create an emergency fund
Before thinking of investing somewhere, a smart move would be to create an emergency fund. Emergency funds not only take care of you during unexpected financial situations, but can allow couples to make long term investments in an uninterrupted manner.
Couples need to decide on the size of their emergency fund. They need to decide taking into consideration what will it be covering, will it affect their monthly expenses, the level of liquidation for their investment portfolio, and if unexpected situations arise would their emergency funds cover them for at least 6 months.
It’s important that a couple understand that they need to share financial responsibilities such as paying the bills, shopping, managing insurance issues, and handling investments. Each category should be divided evenly between each other, so that the entire financial burden doesn’t fall onto one spouse.
In conclusion, talking about money before you get married is essential, not many couples talk about money openly which causes a rift earlier on in the marriage. So, if you’re getting married, talk to your significant other about your financial plan, because you’ll be glad that you did later on.