Negosentro | How to Manage Money as a Couple Before They Say “I Do” | As you enter the life-changing milestone of being engaged, one of the first things you need to do is to work out a financial plan with your spouse-to-be. Things like budgeting, saving, investing, and even taking out loans should be discussed with your better half, since running into problems with any of these things can affect your relationship.
And since you’ll soon have a life together, it pays to make financial decisions with the two of you actively taking part in the process. If you’re unsure how to tackle financial planning as a couple, here are some tips to get you started.
1. Find the right time to discuss your finances
The engagement period may feel like an awkward phase to sit down and talk about money, but a financial strategy is one of the things you need to have before getting married. Plus, knowing that financial planning is part of the transition from single to married life should motivate and excite you.
To prepare for this critical moment, keep these things in mind:
- Make sure both of you are willing and ready to discuss your finance so that no one will feel forced or uncomfortable.
- Be completely honest and open to each other by laying all your money concerns on the table. Avoid trying to hide anything from your future spouse, especially if you’re going into the marriage with some substantial financial challenges like debt or budgeting problems. Use the opportunity to plan how you’ll be fixing such kind of difficulties.
- Consider the fact that your wife- or husband-to-be may have a different set of beliefs about money. The best thing to do about it is to agree on what’s acceptable and what’s not, as it will help your partner learn more about what’s important to you.
2. Come up with a budget plan
For the longest time, you may have been in full control of your budget, but that’s about to change with your spouse-to-be coming into the picture. Welcome it as a positive development, as it means you’ll be putting both of your resources to fund the family’s budget.
Here’s what your budget planning should cover:
- Cash flow—Ideally, you both need to have a regular income stream. You may also have additional earnings from your freelance job or online selling business. List all of your cash flow sources to determine how much money you both are making.
- Savings—Set a goal to save at least 20% of your income every month. If you can save more than this amount, even better. Determine your options on where you can open a savings account, as you’ll want the best interest rates for your money. If 20% seems not feasible, any amount is still acceptable. Once your finances become more stable, you can save more aggressively.
- Expenses—Make a list of your projected monthly fees and how much they’ll cost. To pare down the cost, check if it’s possible to combine some of your expenses, such as sharing cars or phone plans. Eliminate expenditures that won’t add value to your family’s financial wealth, such as expensive gadgets, high-end home decors, and so on.
3. Set up separate and joint bank accounts
As a married couple, you have the option to open either an individual account or a joint account. The goal is to have a dedicated account for household bills, while also keeping a second account for your personal spending.
A joint account is best for funding family expenses, such as mortgage or rent, utilities, groceries, children’s education, insurance, healthcare, and so on. You and your partner are both responsible for adding funds to your joint account—make sure to agree on the amount that you’ll each be contributing.
On top of your joint account, each of you may set up an individual account for personal use. Perhaps you have a long-time hobby that you still want to pursue even after marriage. Charge any expenses that relate to your personal needs to your account.
4. Review your insurance plans
Health insurance and life insurance can be great investments for married couples. If you both have health plans provided by your respective employers, you may compare the benefits between the two. Focus on factors like lower premiums, wider coverage, and accredited hospitals and doctors to determine where to enroll your beneficiaries.
Life insurance is also necessary for the cash benefit it may offer in case something happened to either one of you, so be sure to talk things out with your future spouse.
5. Prepare for retirement
Retirement may be tens of years away, but the earlier you set up your retirement fund, the better. Premiums will be lower when you’re in your 20s or 30s than if you’re already in your senior years. Then, make it a habit to update your retirement plan as your family grows so that you can assign the rightful beneficiaries.
At the end of the day, your goal should be to fill your married life with love, respect, and open communication about everything, including money concerns—there’s no better way to say “I Do” than this.