As you and your spouse bring your lives together, your finances will play a key role in how you plan your shared future. Starting to discuss finances early in a marriage helps form good habits of communication and facilitates shared budgeting for the future. While you may have a grasp on how to manage your finances alone, knowing how to manage finances in a marriage can help eliminate conflicts and set both of you up for a more stress-free life together.
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To help you start off on the right foot, here are some money and marriage tips for newlyweds that can help you successfully manage your money and prepare for the future.
Honesty is the best policy
The first step in managing finances together is being completely open about your financial situations. This involves sharing details about your income, debts, spending habits, and financial goals. Make it a routine to regularly discuss your joint financial status, recent changes, and any unexpected expenses or financial gains. Regular discussions ensure both of you are well-informed, minimising the risk of surprises, it’s important to have a wealth date every quarter, where are discussing everything related to finances and your family’s financial future.
Set marriage milestones
Once you both have a clear understanding of your finances, create shared financial goals and individual financial goals both. These could be short-term, such as saving for new furniture, or long-term, like purchasing a home or saving for retirement. Setting these goals together helps you stay focused and motivated to achieve them. Individual financial goals can be corpus for parents, philanthropy, solo travel etc. It’s both for both of you to be clear about each other’s joint as well as individual goals.
Create a budget for newlyweds
Knowing your collective income and expenses is crucial, especially if you’re new to managing finances as a couple. Creating a budget is a key step in preventing debt and getting out of any existing debt. List your combined income and expenses, such as bills, groceries, entertainment, and debt repayments. This budget will help you monitor your spending, identify savings opportunities, and plan for upcoming costs. Remember to allocate a portion of your income to savings and an emergency fund, ideally covering three to six months of living expenses, as experts recommend.
Establish individual checking accounts
While joint bank accounts are typical, keeping separate individual accounts offers flexibility. This approach, often called the “yours, mine, ours” method, provides each of you some financial independence for personal expenses and surprises, like gifts. It also helps maintain a level of autonomy over agreed-upon funds.
Set a ‘let’s talk’ spending threshold
You don’t need to consult each other over small expenses like an INR 1500-2000 lunch. However, larger purchases should be discussed. Determine a “let’s talk” threshold—an amount that either of you must discuss with the other before spending. This approach prevents misunderstandings about major purchases.
Be aware of your spouse’s debt
When you apply for a loan as a married couple, banks assess both of your credit scores. If one person is carrying significant debt, your application could be denied. Be aware of both your credit scores, and think through how you can look your best on an application.
Purchase life insurance
It’s easy to dismiss life insurance as something you won’t need until you’re older, but buying life insurance when you’re young may end up costing you less in the long run. In the unlikely event that one of you passes, the other will need to continue without the support system you’ve established together. So, don’t wait; the average annual premium of a life insurance policy increases dramatically as you get older.
Don’t feel pressured to buy a home right away
Real estate is an asset (and an investment goal) that many married couples work toward. Speak to a real estate expert in your area if buying a home is an important milestone for you and your spouse. Be realistic about when and what you can buy. If you live in an expensive housing market, buying a home may not be realistic for a while. That’s OK. If renting makes the most sense on a cost level, rent, but contribute to an investment fund that builds equity over time, just as mortgage payments would.
Decide how to approach family and money
If a close friend or a family member approaches you for a personal loan, how will you respond? You and your partner should agree on a policy, so neither of you ever feel that a friend or a family member is being treated unfairly when money is involved.
Prepare and sign a will
Ideally, this should be done early in your marriage, but it becomes more important as time goes on. By the time you’re a decade into marriage, you should have a healthcare power of attorney granted to someone, and your will should be well organised and updated regularly.
Seek help when needed
If managing your finances proves challenging or if debt becomes overwhelming, consult a financial professional. They can help create a budget, develop strategies, and offer valuable guidance to reach your financial goals. While parental advice can also be useful, remember to tailor your approach to suit your own relationship and circumstances.
Managing finances in marriage is a joint effort. By working together, you can achieve your goals and strengthen your bond as you build your lives together.
