Marriage is a milestone that can bring significant changes, not just in your relationship but also in your shared finances. As you embark on this new journey together, it’s important to have open, honest conversations about money and establish a financial plan that works for both of you.
Here are six steps to help newlyweds take control of their finances in their first year of marriage.
1. Start with the money talk
The first step toward building a healthy financial foundation is to discuss each other’s financial backgrounds and habits. You’ve probably already had some version of this conversation, but this is a time to get into the details. You’ll want to talk about exactly how much debt you both have, any investments or savings accounts you own, and how you plan on managing your money as a couple.
Knowing how you both view money and how you plan on handling your finances as a couple can help you plan effectively.
2. Decide on your account structure
Next, decide whether you will combine your finances into one joint account or keep separate accounts.
Some couples may choose to maintain separate accounts, while others may opt for joint accounts, and others for a combination. Consider factors such as convenience, transparency, and shared responsibility while making this decision.
Regardless of the approach, clear communication and trust are key to successfully managing shared finances.
3. Set financial goals together
It’s important that newlyweds decide on shared financial goals they plan to work toward in their first year of marriage and beyond.
Take time to discuss and align your long-term aspirations as a couple. Do you plan to save for a down payment on a house, start a family, pay off debts, build an emergency fund, or travel the world? Set specific, measurable, achievable, relevant, and time-bound (SMART) goals together.
It’s also important to revisit and adjust these goals as needed. This will help ensure that both of you are on the same page, enabling you to stay organized as you work toward a common goal.
4. Create a budget
When it comes to budgeting, there’s no one-size-fits-all solution. You can customize your budget to fit your lifestyle and financial situation.
Start by tracking your monthly expenses, like rent, utilities, groceries, and spending for entertainment. Once you know how much you spend each month, you can work together to set parameters for each spending category and adjust as needed.
5. Establish a fair system by splitting bills
The first year of marriage can be an opportunity to establish a system for splitting bills and expenses.
You can choose to divide costs equally, assign specific bills to each spouse, or split bills based on income and other financial obligations. Find a method that works best for you as a couple and be sure to regularly review and adjust as necessary.
6. Discuss life insurance
Life insurance can be an important part of any financial plan for couples, as it can provide them with much-needed financial security if something unexpected happens.
Evaluate the type and amount of coverage you need based on factors such as income levels, outstanding debts, and dependents. Consider what type of life insurance works for your circumstances. For example, a couple looking for lifelong coverage and a flexible cash value component might choose whole life insurance.
The bottom line
Making thoughtful financial decisions is a major part of building a strong foundation together. Having clear and open conversations about money during your first year of marriage can set you up for future success.
With thoughtful planning and regular check-ins, you can build a solid foundation of trust and understanding that will last through many years together.