For Richer or Poorer: Financial Tips for Newlyweds
Responsible money management is a major component of a happy, successful marriage (it’s even in the vows!) As we are in the full swing of wedding season, it makes sense to look at how to set a new marriage up for financial success.
What’s mine is yours, right? Unfortunately, this well-meaning adage carries different meaning when it comes to debt and marriage.
The current state of consumer debt in Canada continues to hover at an all-time high. How much of that debt belongs to your new spouse? Debt and nasty credit surprises will not only test the strength of your new marriage, they do little to set you up for financial success. To come up with a financial management plan for the household, you have to know what the whole picture looks like.
Bring the financial skeletons out of the closet. If a huge debt load or bad credit is part of the picture, you can take steps towards financial health together.
Take Household Responsibility Together
A household budget is much more likely to be successful if both parties responsible for its success are involved in its creation. Address monthly spending and financial commitments. Decide together how much is reasonable to allocate towards non-essential spending, like entertainment. How much do you plan to save every month? How much are you going to whittle away from debt?
Another point to cover is joint bank accounts vs. status quo. While there is no rule in place that married couples need to have joint bank accounts, you need to set up a banking system for the two of you that supports your lifestyle and is transparent.
Commit to Conversation
Money talk is not romantic- but growing old together is, and good money management is a base for that. Establish a routine to discuss finances on a regular basis. To start, pull everything out on the table, literally, including bank statements, credit statements, investments, etc.
Not Glamorous, but Essential
While you embark on your marriage with rose-coloured glasses, talking about things like retirement planning and insurance are probably not as exciting as pouring through wedding photos and basking in the glow of a new marriage.
However, these are cornerstones of a sound financial plan (which if it is well laid-out, will have goals to address the short, medium and long term). Retirement saving can take a lifetime to accumulate, so should at least be addressed- even if you are focused on paying down current debt load, or saving for a major purchase like a home.
Insurance is essential as well- it is the kind of thing that is easy to put off for a rainy day- unless that rainy day arrives before you are expecting it- and then it is too late.
Is one of you a spender, and the other a saver? Does one member of the couple make significantly more than the other? What would happen in the event of one losing their job? Lay out your financial expectations of each other, honestly. What this will do, at the very least, is communicate these expectations. Expectations that are not defined lead to disappointment and resentment.
Also, decide on who is going to pay the bills. It may be something that you sit down and do together every month.