Financial Advice For The Newly-weds
Marriages are made in heaven but they need to be lived out here on earth. Marriage can be a joyous occasion – a time to make a commitment and start a new journey with your partner. However, when two become one, should your savings and investments also become one? The short answer to that is, NO. Before you get married, don’t be afraid to have ‘the talk’ with your partner and have an honest discussion about finances.
Determine combined income – today, most individuals work and earn their own money. Which means that most households are ‘double income’ homes. Have a discussion with your partner with respect to his/her monthly income while honestly disclosing yours as well. It is very important to be honest to arrive at a combined household income.
Determine expenses and liabilities – once you get married, the monthly expenses can be bifurcated into combined household expenses and individual expenses. Some of these would be discretionary in nature while some others would be non-discretionary. Estimate how much money will be spent monthly on household essentials and decided whether these expenses would be met through a combine pool of income or only one person would take the responsibility for covering these expenses. Also, share the various non-discretionary expenses that you might have in a month. Another aspect that you need to discuss is ‘liabilities’. You or your partner might have existing liabilities in the form of an education loan, a car loan or outstanding credit card payments. Honestly declare your liabilities as it is likely to impact monthly cash flows. Once you have an accurate picture of monthly income and expense, create a monthly household budget.
Bifurcate goals – once you get married, it is inevitable that you have shared dreams and goals. You could have short-term goals like planning a vacation or buying a car and long-term goals like saving for retirement. However, you could also have individual goals – things that you would like to achieve independently. For example, you might want to do an expensive short-term course on financial management. Saving for this goal would then become an individual priority. Bifurcate your goals, determine your contribution to the shared goals and accordingly create a financial plan.
Buy insurance – One of the biggest commitment that you make in a marriage is to take care of your partner and protect him/her from the impact of extreme circumstance. Therefore, it is imperative that you purchase a life insurance policy and nominate your partner as the beneficiary.
Marriage is life-long commitment. While it has its ups and downs, ensure that you always communicate and discuss ‘money matters’.