The first five years of marriage typically come with certain challenges, particularly if for couples that didn’t live together before taking the leap. While just getting used to the other person’s mannerisms can be difficult, achieving financial security is often one of the hardest goals to accomplish. It requires some awkward conversations, especially if you haven’t discussed money before. Plus, you have to align your financial goals, ensuring that you are both working towards the same target.
10 Steps to Financial Security in the First 5 Years of Marriage
A significant amount of achieving financial security in the first five years of marriage involves getting on the same page quickly. Then, you need to keep your goals in sight at all times, allowing you to progress swiftly towards your objectives.
If you want to make sure that your financial well-being is safeguarded, here are 10 steps you can follow as a couple to get you both on your way.
1. Be Honest About Debt
If you haven’t discussed your debt loads yet, now is the time to have that conversation. You can’t make realistic plans if you both don’t know what the other is dealing with, so this discussion is truly essential.
As you both prepare for the talk, remember that debt is common. Most people have some level of debt to contend with, so don’t get defensive about yours or overly critical of theirs. Next, review all of your bills and record the creditor name, balance, interest rate, and minimum payment. If it is an installment loan, you can also note the payoff date, suggesting you don’t try to pay it off early.
Once you both have your information ready, sit down at home and be honest. In the end, you have to tackle your debts together, so you might as well be upfront about where things stand.
2. Discuss Your Income
Debt isn’t the only thing couples hide about themselves before marriage; many don’t disclose the full truth about their income either. If you haven’t been upfront about what you earn, add those details to your debt discussion and ask your spouse to do the same.
Ideally, you want to know your income amounts and take-home pay, as those numbers can be drastically different depending on any automatic deductions are in place. Additionally, if bonuses are common for either of you, make sure to add those points to the conversation.
3. Review Employer Benefit Options
If you are a newlywed, you may have the ability to reduce your costs by optimizing your employer benefits. If you both have access to medical and have the ability to add a spouse to your plans, then you need to see if moving onto a plan together is a wise move. Similarly, you need to compare the coverage you each receive, as one person may have access to a better plan than the other.
While you don’t have to go onto the same plan together, it’s important to evaluate this option. Medical insurance can be expensive, so finding a way to minimize costs or get better coverage is always financially smart.
4. Set Basic Savings Goals
Do you want to buy a house? Go on an amazing vacation for your anniversary? Buy a new car? Prepare for Christmas gifts? Have a child?
If you have any basic savings goals, then planning for them now is wise.
While you don’t need to set specific financial targets for each objective, knowing what each one is can help you plan for your financial future. Have a discussion about what you envision for the future, including over the next one, five, and ten years. Then, see if you agree on a few savings goals, and write them down for future reference.
5. Make a Budget
Your budget allows you to set clear guidelines regarding how your money is used. As you enter a marriage, making sure all of your financial obligations are covered is essential, so you need a plan for handling bills, buying groceries, and paying for anything else you require.
Every couple’s budget will look different. However, it should always address key expenses first, like housing, debt, and basic costs of survival, like food and utilities. Additionally, any expenses that are critical for your employment, such as gas for a car or public transit costs, should also be included.
You also need to designate money for your savings goals, especially if you don’t have an emergency fund in place. Having separate savings accounts for each objective can make it easier to track if you have multiple goals, but that isn’t always necessary.
In some cases, it’s also wise to set a discretionary spending limit (an amount your spouse can spend without your approval) or even designate a weekly allowance. This gives you both a bit of spending freedom without harming your budget.
6. Automate, Automate, Automate
One of the easiest ways to stay on target financially is to automate as much as possible. If you can set up your bill payments to go through on their own every month, do it. This goes for deposits into savings accounts too.
This way, you don’t have to argue about who needs to send what payment, or even remember exactly when your bills are due. In most cases, as long as your bank account is healthy, it’s practically a “set it and forget it” approach to keeping your finances in order.
7. Review Your Accounts Monthly
While you might be about the automate everything, that doesn’t mean you shouldn’t keep an eye on your accounts. Bill paying and deposit technology is pretty reliable, but it is by no means perfect, and you don’t want to end up in trouble merely because you didn’t notice a problem.
Similarly, not reviewing your accounts leaves you vulnerable to fraud. Many banks and credit card issuers will refund money that is taken by identity thieves, but only if you alert them fast enough. If you forget to check your account regularly, a fraudulent $200 charge from four months ago that went unnoticed until now won’t get refunded in most cases.
Once a month, sit down together and review your bank and bill accounts. Make sure the payments or deposits are going through and reconcile your account. Look for signs of fraud and report any issues immediately. You can also review your budget to make sure that adjustments aren’t necessary.
8. Get an Emergency Fund
An emergency fund is critical for financial security. Having at least $1,000 in a savings account can help you weather the unexpected, reducing stress and keeping you both secure.
Make sure some of your savings efforts go straight to an emergency fund. Ideally, you want to build it high enough to cover around three months of expenses, but getting $1,000 into the account is a great place to start.
9. Create a Plan to Eliminate Debt
Debt can weigh heavily on a couple, especially in the first five years of marriage. However, by coming up with a debt elimination plan, you can alleviate your relationship of that burden.
The Debt Snowball method is an incredibly popular option. You begin by identifying your highest interest debt and put every extra dime you can afford toward it every month, allowing you to pay it off faster. Then, when it is paid in full, move on to the next highest interest debt, sending all of the money you used to send to the first one to the second along with the usual minimum payment.
10. Talk Regularly About Your Finances
If you want to make sure that money troubles don’t wreak havoc on your marriage, then you need to talk about money openly and often. Your monthly review of your accounts and budget can be an excellent time to have these talks, allowing you to both discuss your goals, progress, questions, or concerns. Remember, your priorities may change over time, and theirs might too, so keeping the lines of communication open is critical.
By following the 10 steps above, it is possible to achieve financial security in the first five years of marriage. Just make sure that your finances are never a taboo subject, and always strive for full honesty when it comes to money in your relationship. That way, you can make sure you are both on the same page, decreasing the odds that a disagreement will derail your marriage.
Do you have any tips to improve your financial security in the first five years of marriage? Share them in the comments below.