Finance tips for newlyweds

By Drum Digital
09 September 2014

How to set a good financial foundation for your marriage.

Your financial life as you knew it is about to change and you and your partner can decide if this will be a change for the better or not.

Forming healthy financial habits early into your relationship is among the best things you can do for your marriage.

So here they are, some of the things you and your new hubby/wife should be doing to be set for a happy financial life together.

Be candid 

What kinds of conversations did you grow up with around money? Did your parents fight about money?

Discuss your current money habits — do you live hand to mouth? Are you someone who saves?

It's better to establish what kind of spender your partner is early into your union and work on them from then.

Look after the cents

Tally up all your assets — savings, checking, retirement accounts, real estate, collectibles. Also work out all your debt  — school loans, credit card debt and so on.

Determine your net worth by subtracting your debt from your asset. If you don’t know it already, reveal your income to each other.

Set financial goals

Set three kinds of financial goals regarding the kind of funds you should have handy:

1) emergency funds (three to six months of essential bills)

2) one- to five-year goals, such as for a deposit or a trip

3) long-term goals such your child’s education or retirement

Don’t put all your long-term money in retirement accounts, since you won’t be able to withdraw it without a penalty.

Depending on your situation, you may need a professional to determine how to divide your money among debt, savings and retirement. (Find out how to choose a financial advisor.)

Create a budget

Add your essential costs — housing, transportation, utilities, groceries — and discretionary spending — gym, shopping, entertainment, etc. If you aren’t sure how much you spend on various categories, track your spending for at least a month.

Try to save 20% of your take-home pay, putting 10% toward emergencies if you’re still building savings and 10% toward retirement.You should not spend more than 80% of your income.

Decide how to set up your accounts

You can have  all joint accounts or a combination of joint and separate accounts.

You can also choose to have entirely separate accounts. Most couples do one of the first two.

If you have very different spending habits, consider the second option to avoid fighting over spending.

Set a minimum threshold cost for discussing big expenses

Agree to discuss any purchases above a set amount. Anything beyond this should be a decision both partners feel actively involved in making.

Talk about how you'll deal with friends and family who need money

Is this someone who is always in trouble financially, or do they have a sudden illness? You should both be involved in making this decision.

Create/update your will to include your spouse

Without a will, the state will make decisions for you. A will is especially important if one or both of you have children already.

 Update or re-evaluate all your insurance policies

If you both receive health insurance through your employers, see whether it makes sense for you to be on the same plan, and if so, which plan gives you the coverage best for your situation and for the cost. Decide whether you’ll need life insurance.

-FORBES

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