Congratulations on tying the knot! But, are you worried about how you both will manage your finances together? Do not worry! It’s a joint effort in all aspects of life, including finances and money management. As you embark on this exciting adventure of marriage, one critical factor that you should consider is financial planning.
Whether you’ve recently said your ‘I dos’ or are about to walk down the aisle, this guide is created specifically for you. Here, we will help you in creating a financial plan as a couple and make your financial journey stress-free.
1. Open and honest communication on finances
Let’s be real: communication is the foundation of an effective marriage. When it comes to money, this is highly significant. Money talks for newly married couples need to be transparent.
Lay everything out on the table. No secrets, just complete transparency. Discuss these main 3 points for marriage money management:
You might start by communicating your goals, both individual and couple. What do you want to achieve in life, like you want to go for a job change or study further? You must also detail your sources of income and how much you earn, spend, and save for combining finances after marriage.
We have all taken on debt in our lives, and hiding it from your partner is not a good idea. Once you’ve honestly discussed whatever debts you may have, make it your mission to settle them together.
Understanding the interest rates on your loans and credit cards might assist you and your partner pay off high-interest debt. With such joint financial planning, you both can clear your debts faster together.
Everyone has different spending habits and expenses. Some people are born savers, while others like the occasional spend. Remember that the goal is not to change your partner’s spending habits, but to find a medium ground where both of you can be happy. It takes practice, communication, and a bit of compromise.
2. Develop Your Budget
Budgeting for newlyweds may seem like a time-consuming process but think of it as creating a road map for your financial journey. It will assist you manage your spending within your combined earning potential. Categorize your expenses, set aside funds for savings, and track your discretionary spending. After reviewing this list, cut down the unnecessary expenses.
A budget will help you understand financial goals for newlyweds and how much you need to bring in each month, as well as help you deal with debt and minimise overspending.
3. Decide on banking accounts
Joint account or separate account? Some couples swear by joint accounts, while others choose a mix of joint and separate. Decide which method is best for you both. While joint accounts are essential, maintaining individual financial freedom is also extremely important.
You can keep a joint account for joint expenses like household spending. For personal expenses and hobbies, you can keep a separate account or continue with your old personal accounts. At last, what matters the most is building wealth together.
4. Create an emergency fund
Creating a financial plan as a couple also makes it necessary to build an emergency fund. This is because of the unpredictable nature of situations such as medical conditions and job loss. Set aside three to six months’ worth of living expenses as a safety net in case of emergency.
You can make an automatic transfer to your joint account and deposit money for emergencies every month. Get into the habit of saving money, and you’ll be grateful when the rainy days arrive. This is one of the most important marriage and money tips.
Also read:Emergency Fund & Savings Hacks!
5. Start investing for your future goals
Making long-term investments is a strategic way to build wealth together for your future goals. You can do this by investing in different instruments like equity, mutual funds, bank deposits, and so on. However, before you invest, you must agree on how much you can contribute to your accounts, taking into consideration your income and budget.
It is possible that your partner is not as comfortable as you by investing heavily in the equities market or any other riskier instruments. This is because each person has a different risk tolerance level. In that case, explore investment options that are compatible with both your risk tolerance and financial objectives.
Remember, the end goal is saving for the future as a couple and making a well-diversified portfolio.
6. Insurance coverage
Now, let’s talk about protecting what matters most: yourself! Think about insurance as your financial hero.
- Life insurance: Life insurance provides financial security for your loved ones in the event of the unexpected. In the event of your early death, your partner will get the predetermined lump sum as a death benefit, or vice versa. However, you must make them the beneficiary of the policy.
- Health insurance: Treatment for a critical disease might drain your bank account and hamper you from reaching your financial objectives. Adequate health insurance prevents such occurrences.
7. Retirement planning for your golden years
Now that everything is settled for your present life, you have to plan for your future. You may be looking forward to having a retired life together, and you could even have ideas of exploring the world together after you retire. So, establish a plan because planning for retirement is never too early.
To protect your golden years, make monthly contributions to retirement accounts such as EPF, Public Provident Fund (PPF), and NPS i.e., the National Pension System.
Financial planning for newlyweds is a joint activity that lays the groundwork for a successful and secure future together. Communicate openly, establish shared goals, and approach your financial future as a team. By following these newlywed financial tips, you can enjoy a lifetime of financial bliss!