We’ve all heard the term “money is a woman,” but what does this mean in practical terms? Newlyweds can benefit from our list of money tips.
Newlyweds are often faced with a lot of financial decisions that can be difficult to make. This article provides some money tips for newlyweds.
It may not be quite as exhilarating to learn to say “I do” to financial planning as it is to arrange your wedding. You and your spouse, however, may save a great deal of time, worry, and, of course, money by doing it sooner rather than later. After all, one of the main reasons for divorce is financial difficulties.
Finances for newlyweds may include a variety of subjects, from fundamental budgeting to preparation for a kid (or a dog!). Therefore, we’ve put together this list of advice to help you start your newlywed financial planning in order to assist you and your spouse in making the proper financial decisions early on in your marriage.
Related: Basics of personal finance
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1. Examining Financial Motivations
You may want to start by talking about your financial motives to kickstart your newlywed financial planning. This might include realizing your motivations for wanting money as well as how to get it. Do you, for instance, like to reward yourself with a wonderful dinner after you reach a goal? Or does your companion produce pottery or collect coins, both of which may be pricey hobbies?
It can be crucial to comprehend how each of you plans to spend their earnings, whether it be on investments, a pastime, or takeout on payday. You may prevent arguments about money by being on the same page about your intentions.
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Establishing a Budget
It can be wise to begin budgeting after you have a better understanding of one another’s financial goals. You and your spouse will need to be aware of your income and outgoings in order to create a monthly budget.
If you need to make cutbacks to keep your budget balanced because you have more spending than income, speak to someone. The next step after deciding on a budget is to talk about how you can support one another in sticking to it so that you can maintain your financial stability.
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3. Outlining financial objectives
You and your spouse may be able to stick to your budget by setting financial objectives. Do you intend to settle your debts? Would you want to increase your savings? Or maybe you want to improve your credit in order to improve your chances of obtaining a decent rate on a mortgage. Being on the same page may help you achieve no matter what your financial objectives are.
And if you need assistance keeping your money structured, you may want to look at these suggestions for remaining organized while working for your newlyweds’ financial objectives.
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4. Being Honest About Existing Debts & Student Loans
The majority of college graduates have debt from student loans. If you or your spouse (or maybe both of you) find yourselves in this situation, it could be a good idea to have an open discussion about how much money each of you owes and what your duties are in terms of payback, such as monthly payments and interest rates.
While you cannot combine your student loan amounts, you could decide that it would be worthwhile to attempt refinancing them in order to try to get lower interest rates. You could also wish to discuss any outstanding bills, such as credit card, auto, and personal loans, if you’re being completely honest. Your financial objectives or budgets may be impacted by these obligations, particularly if you have loans that are deferred or whose grace periods are about to expire.
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5. Making a Master List of Assets & Liabilities
You may wish to make a master list to keep track of your obligations after talking about them and how much you each owe. Track additional assets, such as cash or cryptocurrencies. A comprehensive inventory of your assets and obligations will make it easier for you to put together a financial statement, which will improve your ability to manage your money and stick to your spending plan.
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Choosing whether to combine accounts 6.
You may want to carefully evaluate which bank accounts you merge, if any, now that you are aware of how much each of you has in terms of assets and obligations. For instance, it could be a good idea to have separate accounts if one spouse has a lot of debt or a bad credit score, particularly if you’re worried about how it would influence your capacity as a couple to apply for a loan or a mortgage. You may decide to have both combined and separate accounts.
For instance, you could wish to have separate checking accounts and a combined cash management account. Being open and honest with each other about whether merging accounts really makes sense for you and your financial objectives can help you avoid a lot of pain (financially and emotionally) regardless of what you decide.
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7. Making a plan for significant expenses
While you may choose to enjoy a dual-income lifestyle without having children right now, you and your spouse could decide to have children in the future. The two of you will need to start saving money immediately if you both intend to start a company, return to school, purchase a house, or perhaps retire early. It might be beneficial to start planning and saving now if you talk about if either of you has major bills coming up individually or jointly. And you may want to think about taking out a personal loan if you need some assistance boosting your capacity to pay for those high-ticket things.
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8. Establishing a Reserve Fund
You might start looking at additional financial requirements, like an emergency fund, if you have a strong understanding of your financial duties and objectives. You can incur significant expenses as a result of home maintenance, automotive problems, or an ER visit. However, fewer than three months’ worth of emergency funds are saved up by 51% of Americans.
You and your spouse may want to discuss how much money you currently have in savings, how much of that can be used to create an emergency fund (if you don’t already have one), and how much you would each need to pay a month’s worth of costs combined in the event of an emergency. That would be a decent starting point if you take whatever that number is and multiply it by three. Once this goal is reached, you may keep saving for a larger emergency fund, which can hold up to a year’s worth of expenses.
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9. Examining Different Insurance Options
It’s crucial to have this discussion early on in your marriage, even if newlyweds may not want to discuss what could happen if one of you gets gravely hurt, becomes incapacitated, or even passes away. If neither of you has life insurance, your spouse and family may be left with a large financial burden.
In case of a medical emergency, you should also think about talking about health insurance coverage. Reviewing if your insurance requirements have changed as a result of getting married, such as whether you now need to include your spouse in your employer-sponsored insurance plan, would likely be part of this process.
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10. Assessing the Reasonability of Investing
If you invest intelligently, investing might be a terrific way for you and your spouse to add some wiggle space to your newlywed budget. You may wish to talk about the investments you made, your risk tolerance, and your investing objectives if you or your spouse now have investments or have in the past. You could think about investing together if your risk tolerances are comparable and investing makes sense given your financial condition and aspirations.
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11. Recognizing one another’s financial practices
Do you believe spending a few dollars more to purchase organic is worthwhile? Does your lover need regular hair appointments? To prevent any shocks that can wreck your budget, you might wish to talk to your spouse about your spending patterns. If you and your partner have different spending styles—for example, one of you is more thrifty than the other—doing this might be extremely crucial. You may be able to prevent future financial arguments by being aware of each other’s spending patterns and making plans for them early on.
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12. Limiting one’s spending
Even though it’s probable that you’ll both have discretionary spending, it could be a good idea to set a certain threshold at which you’ll check in with the other before spending more than you’ve previously agreed to. By establishing a spending cap, you and your spouse may both remain within your means and make money discussions a regular aspect of your relationship. Spending restrictions may also help you both fend against lifestyle creep, particularly if merging your accounts has significantly altered the amount of money you have available.
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13. Consensus Regarding Lending Money
Because she lost her wallet at lunch, your sister wants you to cover the bill, but she pledges to pay you back later. A relative requests a loan to cover the cost of auto repairs. Everyone feels comfortable lending money to friends and relatives to varying degrees. You may want to ask your spouse how comfortable they are with lending money since they could have a zero-tolerance policy after a negative encounter.
And if you and your partner decide to lend money to friends and relatives, it may be a good idea to establish a loan limit and spell out your expectations clearly, including the due date, if interest will be charged, and any other conditions you may have for the loan.
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14. Scheduling Regular Money Talks
It’s also vital to routinely check in on the health of your money once you’ve worked out the specifics of your newlywed financial plans and objectives. If your employment position changes (for the better or worse!) or you have an emergency, your objectives or budget may need to adjust over time. Making money conversations a priority may help you both save a lot of time, money, and sorrow in the future, even if it may not always be enjoyable or pleasant.
DepositPhotos.com, source of the image.
15. Consulting the Experts
It could be a good idea to speak with a financial or wealth management professional as you set your financial objectives and budget. By taking a fair, objective look at your money, a professional may provide insightful advice on how you might achieve your financial objectives.
You may even be able to locate a financial adviser that provides services tailored to budgeting and financial planning for newlyweds. Even while hiring an expert could be an additional up-front cost, their counsel might end up paying for itself.
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The Lesson
It may be time to discuss finances now that the honeymoon is gone. You and your spouse may be able to prevent expensive errors in both your financial situation and your relationship if you and they are on the same page about your financial objectives. And being open with one another about your debts and financial objectives could strengthen your bond even more.
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This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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Farley, Kaitlyn
Farley, Kaitlyn is MediaFeed’s writer/editor. She is a masters of science in journalism candidate at Northwestern University, specializing in social justice and investigative reporting. She has worked at various radio stations and newsrooms, covering higher-education, local politics, natural disasters and investigative and watchdog stories related to Title IX and transparency issues.
Many newlyweds are unsure of how to manage their money, but there are some smart money tips that can help. Couples should consider merging their finances so they understand each other’s spending habits and savings goals. Reference: should couples merge their finances.
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