By Ainsley Selene
Allow me to introduce you to Ainsley- a guru of finances and investments. Today she is talking to us about how to figure out what to do with your finances as newlyweds. It can be a big step to suddenly be responsible and accountable to someone else with your spending, but Ainsley is here to help us ease that transition. Wise words. Thanks Ainsley! – Celeste
Is this a good idea or an early financial decision to avoid? In this post, we will provide effective ways on how you can manage your finances as you enter this new phase in your life.
Certified financial planner Therese Nicklas said that the first rule is to be honest, as honesty can be the greatest foundation of your relationship. Be open in discussing your assets, income, and especially debts (if any). Nicklas said that hiding these details to your partner could be considered as ‘financial infidelity.’ Have a working attitude with your husband/wife by avoiding the ‘this is mine’ and ‘that is yours’ mentality. Bring all financial documents – pay slips, past and recent credit record, insurance policies and more to the table when discussing financial matters. Lastly, there should be no blaming one another. Listen to what your partner has to say and just be honest about your financial situation.
Create a strict budget
When creating a budget, the initial step is to add all the essential expenses, such as rent, food, and utilities before the discretionary costs like shopping and gym memberships. If you are unsure of your monthly spending for each category, we suggest that you keep close track of your spending for a month. In terms of your savings, it is recommended to save 20% of your monthly salary for emergencies (10%) and retirement (10%). Smart spending is necessary now that you are saving together for your family. Thus, instead of dining out, cook together at home or cut out rarely used expenditures such as cable or expensive smartphone plans. For those with previous debts, only use 30% of your salary for savings and paying liabilities, while 70% should be your take home.
There should be three kinds of goals that couples have to include in their new financial plan: emergency funds, short term goals for one to five years, and long term goals for the future. Short term goals include costs for down payments in case you are to purchase a new home or car, while long term goals cover payments for your children’s education and retirement. Never invest all your money in retirement accounts, as it will now allow you to withdraw the amount without incurring a penalty. It will help to discuss your realistic life aspirations together, as your savings and financial goals will be determined by it. At some point, it will help to consult a professional in managing your finances, so never be afraid to do so when you feel it’s necessary.
Discuss possible investment plans
Included in the process of outlining financial goals is to discuss investment opportunities that you can do together. It can either be a health plan that covers all your future hospital bills, especially maternity costs, and other investments that can keep your money earning instead of sitting in your bank account. However, you need to take note that investing requires more than just knowing the basics, especially if you decide to invest your money in the stock market. FXCM states, “Education is essential” when investing so that you know how much you should invest, what should be your realistic ROI (return of investment) value, and when to call it quits. They did remind possible investors to cut losses and let profits run. Although it is difficult to throw in the towel and as humans we rarely want to admit defeat, this shouldn’t impact your willingness to invest in the future. Rather, it should set your limitations on how much you are willing to risk to earn bigger.
Lastly, enjoy the ride. Being a newly wed couple, you need to take things lightly for now and enjoy every new change in your lives. Money should not be the center of your relationship, but failing to manage it can greatly affect your marriage – often, it’s the root of many divorces. If you think you have more tips for our readers who just recently got married, then feel free to leave a comment below!