Newlyweds bring with them an entire lifetime of financial baggage – some of it good and some not so good. The trick is to head off financial conflicts by front-loading a few tasks.
Have the Big Money Discussion
Put time aside to have a frank discussion about money and money management. If you’re nervous about discussing finances, it is particularly important that you do so. According to Marriage.com, money is one of the top reasons couples divorce. In order to avoid this issue, you should carve out an afternoon or evening to have a heart-to-heart about finances and don’t call it good until you’ve learned a number of things about each other, including:
Decide if You’ll Merge Finances
There is no rule that says married couples must share a bank account, retirement fund, or other financial assets. In fact, if you each agree to it you can keep your finances separate, merging only when you are working toward a common goal. Or, you can create a “hybrid” budget in which you each have your own accounts, but also share one. The shared account may be used to pay housing costs like rent, utilities and any shared vehicles, while your separate accounts are dedicated to the things that are important to you as individuals.
If, after discussing the matter, you decide to merge all your accounts into one, create a blueprint for how you want it to work. How much can one person spend without letting the other know what’s going on? For one couple that amount may only be $50, while another may be comfortable with a higher number. Determine what your priorities are as a couple. Among the things you must decide are:
Create the All-Important Budget
If you’re new to budgeting, you may find the 50/30/20 method helpful. Using this budget, 50 percent of your income goes toward paying for the things you need, 30 percent goes toward the things you want, and 20 percent is dedicated to debt repayment and savings.
Creating a budget involves calculating your take-home pay, recording your bills and their associated payments, and making sure you have enough take-home pay to cover the bills, save for your goals, and put money away for emergencies.
According to Time Magazine, if you find that your take-home pay is not enough to cover your entire budget you should download your last two months of bank and credit card statements. Put everything on those statements into a category, like “groceries,” “life insurance,” or “automobile costs.” These categories should quickly indicate where you can cut back. For example, if “eating out” is more than you expected, eat more meals at home. If you can’t meet your financial goals because you’re stopping for a drink twice a week after work with friends or still paying for season tickets, consider which of these you can live without until you’re making more money or your debt is reduced.
The idea behind budgeting is not to deprive you of life’s little luxuries, but to leave you with enough money each month to allow you to sleep well at night and to provide
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