Marital vows are all about togetherness, the couple now has to start thinking for two, rather than for just oneself! An often-ignored aspect in all the lovey-dovey hype of being newly married is the change in financial status as a result of the marital communion. It is not uncommon to see marriages breaking on account of financial discord. Who spends how much on what, how much to save versus invest versus spend, what amount of the financial kitty will be joint versus individual- the questions are plenty. If unresolved, these issues can damage the relationship and even threaten its sustenance.
It is, therefore, best to discuss certain financial arrangements beforehand and plan out your approach in the marriage soon after the wedding. Here is some financial advice for newly married couples which will help them navigate this crucial milestone.
1) Discuss Financial Status And Expectations
Ideally, this should be done before marriage, but if not, the next best time is soon after the wedding. Sit down together and assess the accounts both of you own, any outstanding debts and your current financial status. This discussion should be about clarifying the financial facts. The discussion must then extend to setting expectations on spends, savings, investments and transparency. This is the most important step in newly-wed financial planning and clears the ground for financial trust going ahead. For example, if you want spends above a certain amount to be discussed or shared, openly tell your spouse about it.
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2) Align Financial Goals
Financial goals are tied closely to life goals, and your life goals may not be the same as your spouse’s. This means that you need to align your financial goals with your spouse’s and so does he or she. Important financial goals that need to be clarified and agreed upon are:
a) Agreeing on a monthly budget. You can refer a budgeting guide for this.
b) Agreeing on the financial status i.e. one-income familyo versus double-income family. For example, you may plan to leave your cushy job to start a business somewhere down the line. Not communicating this beforehand may disrupt your spouse’s plans and put unnecessary financial (and emotional) pressure.
c) Agreeing on priority spends. Financial priorities greatly differ. While your spouse may be saving up to buy that dream car, you may be focussing on bagging the elite business education you always had your eye on. Other considerations include how much to spend on basics like housing, kid’s education, etc. versus on frills like vacations and eating out. These may appear trivial matters, but changing a lifestyle is not easy and these basic questions may flare up into ugly arguments. It is better to agree on limits for each category of spends.
d) Writing down the non-negotiables. Some of the must-dos in a healthy marriage should be as follows:
– Never hide money or spending from one another.
– Start building an emergency fund together from the start and never use it for non-essential expenses.
– Plan for retirement in your own individual retirement plans, never dip into your retirement savings
3) To pool in or Keep it Separate?
Marriage is all about togetherness, but does this mean you have to be together in every respect? Should you maintain separate bank accounts or a single joint account? Should you lease your home on both your names or only one? There are pros and cons to both approaches, it is a question of maintaining your individuality and to what extent. In today’s age of high divorce rates, some degree of separation can provide you with the much-needed financial protection to safeguard your future. Some feel that joint accounts breed trust in the marriage, making it more likely to last. The outcomes can be many, the idea is to discuss beforehand how to combine finances after marriage.
4) Prepare For Unplanned Eventualities
However much you plan, there may be a time when you as a couple need to support each other irrespective of your mind-voice telling you otherwise. Your spouse may take a career break to raise the kids. This may need you to live leaner and support the family on one income. Or you may want to pursue higher studies to advance your career, in which case your spouse must be ready to take on some earning ownership. Discuss your aspirations periodically and openly, and be willing to accept each other for who you are. A marriage after-all works both ways.
Many people would throw advice about financial planning for married couples. The key to unveiling financial success in a marriage is to know your spouse well in these respects and be open and transparent in communication. It means bridging the gap between personal financial goals and the financial goals of the person you love to realise a common outcome. Newlyweds must sort these out on priority to enjoy a long and blessed relationship.