Getting married is one of the biggest steps a couple will take in life. Often, marriage means merging finances. The most common problems that arise are spending habits, debt load and not having a plan for the present or the future. The following tips will help a young couple get their money on track, so they can enjoy their new life together.
Make Money a Priority
Money is a large issue in marriage, but newlyweds may not realize this. It is helpful to set financial goals from the beginning. The couple can start small with a one-year goal, then work up to five and 10-year milestones.
Reduce Spending and Debt
Early in a marriage, it is common for a couple to blend their money while they are both still spending a great deal individually. They may soon find themselves in debt before they are financially able to handle it. The best way to avoid going into debt is to “sleep on it” before making a purchase. In many cases, the couple will decide they do not need the big ticket item at the present time, and disaster is avoided. Another excellent approach is to set a limit on how much can be spent on any given purchase, while ensuring there is a little leeway for the occasional indulgence.
Create a Joint Bank Account
Keeping finances separate for a short time after marriage is fine, but eventually, a joint bank account will need to be established to cover the monthly household budget. This will include the costs of car payments, child care, groceries and utilities. While the contributions from each person will differ from marriage to marriage, it is important to establish how the account will be maintained overall. A joint account will also help couples to communicate about money to avoid tension.
Talk About Money
Set up a time to discuss money every month. The young couple should also avoid keeping secrets, such as loaning money to a friend. Investing should be done carefully because if it fails, both people will be affected by the fallout.
Set Up an Emergency Fund
Having extra money set aside in case someone becomes ill or loses their job is a fiscally responsible move. This will help the couple avoid having to depend on friends and family members in order to keep their home and stay on top of bills. It will also keep them from blaming each other if life throws them a curve ball or two.
Marriage is all about compromise, and this is especially true of lifestyles. Perhaps one partner brings in more income than the other and enjoys pricey dinners out and luxury vacations that the other partner cannot afford. By combining the lifestyles of both people, a compromise can be found between fun and practicality, such as curtailing some socializing so each can enjoy a personal hobby.
The best time for a young couple to talk about finances is before they take their vows. Developing good spending, saving and communication habits now will save heartache and problems later on.