Being a newlywed is an exciting time, so it’s understandable that many couples put off discussions about credit card balances, student loan debt, and division of household expenses until after the honeymoon. While discussing finances before saying “I do” may not seem very romantic, doing so is one of the best ways to avoid financial disaster — and a costly divorce. Here are four tips for managing your finances as a couple.
Discuss Your Financial Goals
Sharing a financial goal with your spouse gives you a dream to work toward. Be sure to put your goals in writing; doing so will cement the importance of saving and investing, and create a visual reference point for how you want your financial future as a couple to look. When setting goals, make sure you’re both clear on things like how bills will be paid, whether you’ll file taxes together or separately, and where important financial documents will be kept. It’s also a good idea to talk about what will happen if one or both of you go into debt. If you’re currently in debt, specialists at sites like http://debtconsolidate.company/ can help get you back on track financially.
Think Long Term
You and your spouse may be young now, but one day you’ll be old. It’s important to make plans as a couple for a future where one or both of you will be too old to continue to work. The good news is that the younger you are, the easier it is to save for retirement. You only need to save a little bit of money from your paycheck if you start saving for retirement in your twenties. If you wait until your forties or fifties, you’ll have to save much more of your income during a time when you’re likely to have more financial responsibilities (i.e. mortgage, car payments, your children’s education). Sit down with your partner as discuss what the two of you would like your retired life to look like. Then, start saving. You should each be aiming to save 10 percent of your individual incomes in your individual retirement plans.
Start an Emergency Fund
Set up a joint account and transfer money into that account regularly until you’ve built up an emergency fund. You’ll be happy you put that money aside in the event of a car breakdown, a job layoff, or an unexpected home repair. Keep in mind that you may not be able to use your credit card in an emergency, so it’s also a good idea to keep a small amount of emergency cash in the house. As a general rule of thumb, you should save three to six months’ worth of living expenses to help in case of emergencies.
Be Open and Honest
Be honest with your spouse about your spending. Remember, the financial goals you’ve set as a couple — whether it’s yearly vacations or saving for a down payment on a house — depend on the money in your joint accounts. If you’re withdrawing money secretly from accounts or using credit cards that your spouse doesn’t know about, you could be putting your entire marriage at risk. Consider also that divorce is very expensive. One of the best financial decisions you can make as a couple is to keep your marriage healthy.