Congratulations on tying the knot! As you embark on this exciting chapter, it’s time to focus on another important union — your finances.
Did you know that money disagreements are one of the leading causes of marital stress? But don’t worry, newlyweds! We’ve got the financial moves that’ll set you up for a lifetime of financial harmony and success.
As you transition from “mine” and “yours” to “ours,” it’s crucial to align your financial goals and habits. Open communication about money is the cornerstone of a healthy financial relationship.
Now that you’ve walked down the aisle, let’s walk through ten essential money moves that’ll help you build a strong financial future together.
1. Have the Money Talk
The first step in your journey as financial partners is to have an open and honest conversation about money. This might feel a bit awkward at first, but it’s essential for building trust and understanding.
First, schedule a “money date” to discuss your finances openly and honestly. Cover your current financial situations, including assets, debts, and credit scores. Focus on your individual and shared financial goals, as well as your spending habits and money values.
Discussing your attitudes towards money and your financial aspirations is crucial. Do you prioritize saving for the future or living in the moment? Are you aiming to buy a house, start a family, or travel the world? Finding common ground on these big-picture items will help guide your financial decisions as a couple.
Remember, honesty is key. Keeping financial secrets can be just as damaging as other forms of infidelity. This conversation might initially feel uncomfortable, but it truly sets the foundation for a strong marriage.
You might be surprised at how much you learn about each other in the process. Use this opportunity to understand each other’s financial backgrounds and attitudes towards money. It’s a chance to align your financial philosophies and set the tone for your future together.
2. Create a Joint Budget
Now that you’ve laid the groundwork with open communication, it’s time to manage your finances as a team. A shared budget is crucial for putting your plans into action and building the life you want together. Think of budgeting as a way to empower your goals rather than restrict your spending.
Start by listing all your combined income sources and expenses. This includes everything from your salaries to your Netflix subscription. Be comprehensive – you might be surprised at how many little expenses add up!
Decide how you’ll handle shared expenses like rent, utilities, and groceries. Many couples find success with the proportional method, where each person contributes based on their income percentage. Don’t forget to budget for individual expenses too – having some financial independence can be healthy for your relationship.
Consider using the popular 50/30/20 rule: allocate 50% of your income for needs, 30% for wants, and 20% for savings and debt repayment. Regularly review and adjust your budget to keep it relevant to your changing circumstances.
If you’re having trouble sticking to your plan, a budgeting app can make tracking your expenses much easier and help you stay on course. Use apps that provide visual representations of your spending habits, or talk to a financial advisor to strategize your financial success as a couple.
3. Decide on Account Management
One of the biggest financial decisions you’ll make as newlyweds is how to structure your bank accounts. Some couples find that fully combined accounts simplify their finances, while others may prefer to keep some separate.
Joint accounts foster transparency and make it easier to manage shared expenses. They can also help you work towards common goals more effectively. However, they may lead to a loss of financial independence and can complicate matters if one partner is a big spender.
Keeping separate accounts allows for more individual control and can be beneficial if you have different spending habits. You might consider a “yours, mine, and ours” approach, where you maintain individual accounts for personal expenses and a joint account for shared costs.
A combination of both accounts makes it easier to manage joint expenses while allowing for personal spending, striking a balance between unity and independence in your financial life. There’s no one-size-fits-all approach, so discuss what feels right for your relationship.
4. Set Financial Goals Together
What do you want to achieve as a couple? Setting clear financial goals can help you stay motivated. You might establish short-term objectives, like saving for a vacation, medium-term goals such as purchasing your first home, and long-term plans that focus on retirement.
Start by discussing what matters most to both of you. This could include saving for a down payment on a house, planning for children, or taking an annual vacation. Write down your goals and prioritize them together.
Make your goals SMART — Specific, Measurable, Achievable, Relevant, and Time-bound. For example, instead of “save for a house,” your SMART goal might be “save $40,000 for a down payment on a $400,000 home by December 2026.”
Writing these goals down and reviewing them regularly can keep your financial aspirations fresh in your minds. The more specific you are, the better. Instead of vague ideas, aim for concrete targets like saving a set amount of money by a certain deadline.
Set aside time every few months to review your progress and adjust your goals as needed. Discussing finances with each other and a financial advisor is crucial to staying ahead of the game. Life changes and your financial plans should evolve, so regular check-ins about your progress can help keep you both engaged and motivated.
5. Build an Emergency Fund
An emergency fund acts as a safety net for unexpected life events. Aim to set aside three to six months’ worth of living expenses in a readily accessible account. Start small if necessary — consistent contributions, even if modest, can build a substantial buffer over time.
However, as a newly married couple, it’s better to aim for an emergency fund on the higher end of this range, especially if you have variable income or are planning major life changes.
Make building your emergency fund a shared goal. Consider setting up automatic transfers to a dedicated savings account. You could also challenge each other to find creative ways to boost your savings, like a “no-spend” month or selling items you no longer need.
When deciding where to keep your emergency fund, look for a high-yield savings account that offers easy access to your funds. Online banks often offer better interest rates than traditional brick-and-mortar institutions. Just make sure the account is FDIC-insured for added security.
Having the financial cushion of an emergency fund provides peace of mind. It allows you to address abrupt expenses without derailing your financial goals. Think of your emergency fund as a lifeline for your future selves when any unexpected expenses arise.
6. Review and Update Insurance Policies
As your lives intertwine, make sure you’re adequately protected. The first step is to review your health insurance to determine whether to combine plans or maintain separate coverage — one spouse’s plan may offer better coverage or lower premiums.
Now that you’re building a life together, life insurance becomes more important. Assess your life insurance needs to ensure each partner’s financial security in unexpected situations.
Next, update your auto insurance to reflect your marital status, possibly earning you a discount. Make sure your homeowners’ or renters’ insurance is sufficient for your combined belongings.
Finally, don’t forget to update the beneficiaries on your existing insurance policies, retirement accounts, and any other financial accounts to reflect your new marital status. Set a reminder to review your policies annually or whenever you experience a significant life change.
7. Kickstart Your Retirement Planning
It’s never too soon to start planning for your golden years, no matter how far they may seem. Now that you’re married, it’s crucial to plan for two — and factor in plans like growing your family and furthering their education along the way.
To start, make sure you’re maximizing contributions to any employer-sponsored retirement plans available and get the most out of the contribution matching schemes they offer. Overlooking these can often amount to ignoring free money.
Consider opening Individual Retirement Accounts (IRAs) to supplement your employer-sponsored plans and boost your long-term savings. Depending on your income and tax situation, an accountant or financial advisor could help you decide whether traditional or Roth IRAs are right for you.
Finally, make sure to factor in saving for education and healthcare. Setting aside money into tax-advantaged accounts like a Health Savings Account (HSA) and ESA (Education Savings Account) or 529 Plans is crucial for keeping your plan on track in case of any financial detours. If you’re unsure about which type of account is best for you, match with a wealth advisor who’ll point you in the right direction based on your needs.
The most important thing is to talk to each other and your financial advisor about what you want your retirement to look like. Do you dream of traveling the world, or do you see yourselves settling in a quiet beach town? Having a shared vision can help motivate you to save and invest for the long term.
The earlier you start saving, the greater your growth potential. Not only does consistent savings build your retirement fund, but it also instills a financial discipline that can benefit your marriage long-term.
8. Tackle Debt as a Team
Debt is a reality for many couples and can be a significant source of stress in a marriage. Addressing it head-on as a team can strengthen your financial future.
If either partner brings debt into the marriage, approach it as a united front. Begin by making a list of all debts — including credit cards, student loans, and any personal loans – from highest interest to lowest interest.
Next, create a realistic repayment plan that fits within your budget. Consider utilizing methods like the debt snowball or debt avalanche to pay it off more effectively.
The debt avalanche is the method of tackling your highest interest rate debt first, while debt snowball means paying off the smallest balances first for psychological wins. You might also look into balance transfer credit cards or debt consolidation loans if they make sense for your situation.
As you work on existing debt, commit to avoiding unnecessary new debt. This might mean delaying large purchases or finding creative ways to cut expenses. Remember, every dollar not spent on interest is a dollar that can go toward your shared goals!
Eliminating debt together can strengthen your relationship and provide a sense of shared accomplishment. Celebrate the milestones along the way! Each debt paid off is a step towards greater financial freedom and security for your future together.
9. Invest in Your Future
After managing debt, investing is a powerful tool for building long-term wealth, but it’s important to approach it as a team. As newlyweds, consider investing beyond retirement accounts, but not before discussing your attitudes towards risk.
One of you might be more conservative while the other is comfortable with higher-risk, higher-reward investments. Find a middle ground that you’re both comfortable with.
Once you’re on the same page about investing, the first step is to open a joint brokerage account. Alternatively, real estate can also be a solid yet more hands-on investment, allowing you to build equity for the future. Consider which assets work best for you.
Once you begin investing, it’s important not to put all your eggs in one basket. Consider a mix of stocks, bonds, and other assets that align with your goals and risk tolerance. If you’re new to investing, low-cost index funds are often the safest choice.
Low-cost index funds and exchange traded funds (ETFs) are a great way to start building a diverse portfolio, ensuring you’re prepared for whatever the financial landscape brings. Discuss your risk tolerance as a couple and create an investment strategy that aligns with your shared goals and comfort level.
Remember, investing is a long-term game. Stay focused on your goals and avoid making emotional decisions based on short-term market fluctuations. Hiring an investment advisor could save you money in the long run since their expertise could help you avoid common financial setbacks.
10. Plan for Major Life Events
Thinking ahead to significant milestones like buying a home or starting a family can make or break your financial planning as a married couple. Consider how these events will impact your finances and discuss how to prepare. Formulating a joint plan can ensure you’re both on the same page.
If homeownership is on your radar, start saving early. Research first-time homebuyer programs in your area and consider opening a dedicated savings account for your down payment. Don’t forget about the costs of furnishing and maintaining a home.
Keep in mind other major expenses you might face in the coming years, such as a new car or starting a family. Factor these into your long-term financial planning.
Career changes or further education must be taken into consideration in your planning. These decisions can have significant financial implications and should be part of your ongoing financial discussions.
By anticipating life changes, you can make informed decisions and avoid unnecessary stress as these milestones approach. Start saving early for these goals, and be prepared to adjust your financial plans as your priorities evolve.
Congratulations!
Managing finances as newlyweds requires open communication, teamwork, and shared goals. By implementing these ten money moves, you’re setting a strong foundation for your financial future together.
Remember, financial planning is an ongoing process that requires regular communication and adjustments. As your lives evolve, so will your financial needs and goals.
While these steps provide a great starting point, navigating the complexities of joint finances can sometimes benefit from professional guidance. A financial advisor who specializes in newlywed financial planning can offer personalized advice tailored to your unique situation and goals.
Ready to take the next step in your financial journey as a couple? Don’t navigate these waters alone. The advisor matching tool finds financial professionals to guide you through important decisions and help you build a strong foundation.
Take action today:
- Use our tool to match with an experienced advisor that best suits your needs.
- Get tailored advice on implementing these money moves in your specific situation.
- Start building your financial future together with confidence.
With the right planning and support, you can look forward to a lifetime of financial harmony and success. Here’s to your happily ever after – both in love and money!
