As newlyweds, it’s normal to focus on the joy of being a married couple. However, your worlds have just intertwined on a whole new level, particularly your financial lives. If you want to avoid conflict in the future, there are certain steps you should take right away. Here’s a look at some of the best financial advice for newlyweds to get started on the right foot.
Talk About Your History with Money
One of the most important things you can do as newlyweds is spend some time talking about your history with money. This not only includes going over the income and debts you’re bringing into the relationship but also how your parent’s views on money shaped your perspective.
The idea here isn’t to change how anyone acts. Instead, it’s to understand why you each make certain money-related decisions, particularly when it comes to spending vs. saving. Additionally, it’s a chance to talk about the reasoning behind various financial goals and priorities. In the end, you’ll get to know one another on a deeper level, and that can help set you up for long-term success.
Don’t Hide Your Debt
While coming into a marriage with substantial amounts of debt might not feel great, it’s critical to be honest about your financial situation. Your debt now impacts not just you but your spouse, too. It could limit both of your access to financial products, alter interest rates on new accounts, and affect your joint budget.
By being honest, you can come up with a plan to handle the debt. That ensures you’re in it together, which can make a substantial difference when it comes to your odds of success.
Discuss Your Financial Goals
While it’s easy to assume that you’d both be on the same page regarding financial priorities, the reality of the situation may be different. Since that’s the case, it’s best to take a moment to discuss your financial goals.
Ultimately, this is a chance to learn more about each other’s priorities and get on the same page. Since many financial goals would take a joint commitment, that makes this step essential. That’s particularly true if you have some priorities that aren’t aligned, as it allows you to come up with a plan together to ensure progress is made appropriately without making one spouse feel like their goals are being ignored.
Decide About Merging Your Finances
The majority of couples combine their finances at every level. However, there are situations where that might not be wise. Some couples are better off coming together to handle joint responsibilities while leaving their spending money separate. Others may find near-total autonomy – aside from covering a set of assigned household bills – is the best option for them.
Which option is right for you will depend on several factors. Whether you have vastly different money styles may play a role, for example. Since the best choice for one couple may not work for another, you need to sit down with your spouse and have a discussion. Then, you can decide whether merging your finances is wise and, if so, to what degree.
Create a Budget Together
When you’re married, you typically operate as a single household. Since that’s the case, your old budget might not be a great fit any longer.
Ideally, you want to sit down together to create your first budget as a couple. Along with ensuring you both know precisely what the household’s income, debts, and obligations look like, it allows you to discuss how money will be directed toward various goals.
Often, the easiest way to begin is to simply list every expense or debt each person is bringing into the marriage. Eliminate any redundancies, such as by canceling any duplicate streaming services. Then, start allocating income until every expense is covered.
How you allocate the income may depend on whether you’ll have a joint bank account or separate ones. In either case, it’s wise to work this out now, ensuring there won’t be any confusion later.
Figure Out How You’ll File Your Taxes
As a married couple, you have two choices when it comes to filing your taxes. First, you can go with “married filing jointly.” Second, you could each file on your own, using “married filing separately” instead.
Which approach is best for you will depend on your unique financial situation. The option you choose may impact your eligibility for certain tax deductions, access to income-driven student loan repayment plans, total tax liability, and more. Since that’s the case, you may want to speak with a tax specialist or financial advisor to see which approach is the best fit.
Get an Emergency Fund Going
If you aren’t bringing a solid emergency fund into the relationship, then it’s time to get one going. Having a few months of expenses set aside can help you weather most financial hardships. Whether it’s an unexpected repair bill or a sudden job loss, you won’t have to turn to debt to keep your financial life in order.
In most cases, your best bet is to set up a new savings account specifically for your emergency fund. If possible, choose a high-yield account, as that allows any money you set aside to grow while keeping it very liquid. Then, make regular contributions to the account until you reach your savings target.
Start Saving for Retirement
Getting married changes your financial picture, including your retirement in the future. Since that’s the case, it’s wise to sit down together, discuss how you envision spending your golden years, and start saving toward that future right away.
Usually, the first step is to maximize the value you get from any employer plans, such as by ensuring you get the full 401(k) match if one is available. After that, you can use other approaches, such as setting up IRAs to give you more savings options.
Schedule Monthly Budget Meetings
Having regular talks about your finances can prevent disagreements later, so it’s wise to schedule a monthly budget meeting to review your finances together. Consider making it a fun occasion by ordering some of your favorite takeout before you start tackling financial discussions.
Along with reviewing your budget, take this as an opportunity to discuss any other money matters. That could include progress toward a goal, a new goal you’d like to add, or a potential issue you see forming on the horizon. That way, you can be proactive, reducing the odds of unpleasant surprises.
Don’t Make Big Purchases Alone
Spending habits are a common area where couples don’t see eye-to-eye. This is particularly true if one spouse has a habit of making large purchases with joint funds without consulting their partner.
Since it can quickly become a point of contention, it’s always best for spouses to avoid making big purchases without discussing it with their partners if joint money is involved. That ensures both spouses are on the same page before any funds are spent, avoiding potential conflicts.
If either spouse finds this particularly restrictive, one option is to give each spouse an allowance that they can use as they see fit. By taking a set amount of cash and moving it to a separate account that they can use in whatever manner they want, it creates some freedom. Whether it’s small purchases or large ones, with that money, it’s all their decision, but it won’t impact the broader budget.
Evaluate Your Insurance Options
When you get married, your insurance needs may change. For example, you may want to adjust your life insurance based on this major life change. Additionally, you might have access to options that weren’t available previously, such as health insurance through your new spouse’s employer.
You and your spouse should sit down and evaluate your entire insurance situation, including how your needs may have shifted or your access may have changed. That way, you can make sure your coverage is comprehensive and that you’re getting the best price across the board.
Just make sure you act relatively quickly. Usually, you have 60 days from the date of your marriage to enroll in new healthcare coverage if that’s something you’d like to do. Otherwise, you’ll have to wait for open enrollment near the end of the year to make that change.
Do you have any other financial advice for newlyweds? Have any of the tips above ever saved you from a financial hardship or conflict in your relationship, and you want to tell others about your experience? Share your thoughts in the comments below.
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