It’s not surprising that leading cause of stress in a relationship is directly attributed to money issues. Secure and strengthen your future together with a robust financial management plan. Learn the best financial advice for newlyweds and married couples. With careful planning and smart decision-making, you’ll achieve a financially happy marriage. Here’s how to avoid 5 of the biggest financial money and marriage problems that couples face:
1. Avoiding the topic.
Keeping your spending priorities and financial habits under wraps from one another is a sure-fire way to strain your marriage. Some spend thousands on food and drinks alone in a month, some prioritize spending on video games more than saving up for a new car, while others become spend thrifts. Whatever it is, talking about finances as a couple on how to manage, tackle debt and how much to save is critical in ensuring a happy marriage.
Solution: Communicate regularly.
How exactly do you communicate effectively? Carve some time out with your partner for a judgement- and criticism-free discussion and do it regularly. Different people have different habits and priorities, so it’s important that both partners communicate openly and be open to compromise. Be honest, and work through it with your partner. Allow mistakes to happen from time-to-time because old habits are hard to break.
2. Not saving for the unexpected.
How many times in your life has something popped-up unexpectedly that cost you $1,000 or more? Add kids and pets to the picture and the list of potential financial disasters increases. After a stressful event, the last thing you want to fight with your spouse about is more debt.
Solution: Build an emergency fund.
Plan for the unexpected and create a sizable emergency fund according to both of your specific needs. Take into consideration your family’s health concerns and condition, job security, vehicle condition, etc. A separate joint high-yield savings account is perfect since it allows you to sock some cash away with great returns. When life throws you a nasty curveball, you can relax knowing that you’re in good shape to hit that ball right out of the park.
3. Not allocating your finances appropriately.
Don’t be one of those couples who forgot to pay their bills because they thought the other person was doing it.
Solution: Open a joint account and set up automatic payments.
Set up a joint checking account and automate your payments for all household related expenses such as mortgages, auto-loans and monthly utility bills. Allocate bigger expenses like vacations, or your dream kitchen into a joint High-yield Savings Account. Lastly, what’s left should go into your respective personal accounts. You could appoint a “CFO” to manage your joint accounts to pay your bills online. We love this method because it combines your finances in an equitable manner, while maintaining the independence to spend or save the rest, free of any guilt or judgement.
Tip: if one member of the household earns more than the other, ratio your salaries and agree to a set amount to which each partner contributes to the joint account. For example, if you earn $80,000 and your spouse earns $50,000, the ratio is 62.5%-to-37.5%. This ratio should obviously change as incomes change.
4. Not having a budget.
Unless you won the Powerball®, you need a budget for all of your spending. Just kidding, even if you won the lottery, you’d still be better off with a budget! Eyeing that 4K UHD Smart TV but not sure if you can afford it? Most people would go ahead with the purchase thinking, “Hey, it’s all good, I’ll make the money later” without giving a second thought to whether they can afford it. When financial stresses start to creep in, the blame game between the two partners begins.
Solution: Track your spending.
“Honey, we’ve already dined out too many times this week!” Budgets restrain us from doing things we like, so frankly, it’s painful. Our tip is to start small by tracking your expenses without setting any restrictions on your spending. Over the course of a couple weeks, look back at your tracking spreadsheet to see what areas are holding you back. Start restricting and changing your habits little-by-little. For example, stop buying that cup of coffee every day and, instead, make one at home. Still need more help? Money Manager is available to all Empeople members via digital banking at no charge. Allowing you to create budgets, track spending habits, set financial goals, monitor income and bills.
5. Not having a financial plan.
It’s never too early to talk about your retirement and savings goals. Make it fun! Talk about your dreams, whether it be cruising down the Caribbean on a speed boat, or out in the backcountry fly-fishing until the sun fades into the horizon. This goes hand-in-hand with having a budget, so you know exactly how much you need to sustain yourself to live a content lifestyle. Being aimless with your savings means spending unnecessarily and out of budget. When that happens, you’re much more likely to run into financial problems.
Solution: Seek counsel from an accountant and financial advisor.
Speak with an accountant or financial advisor about your tax advantages and liabilities. Married couples have different tax circumstances that could cost or save you money. If you’re not ready for either of the two, a good rule of thumb is to start by saving at least 10% of your income. Set your balance transfers to automate your savings into a joint High-yield Savings Account or Individual Retirement Account.
Final notes: Whichever way you decide to manage your finances, it’s already a good start that you’re here reading this blog. Remember, your parents could also be your best source of financial advice and wisdom, reach out! Communication is key! We hope these tips are helpful to have a financially happy marriage.
This article has been provided for educational purposes only and is not intended to replace the advice of a loan representative or financial advisor. Empeople does not provide tax advice. The examples provided within the article are for example only and may not apply to your situation. Since every situation is different, we recommend speaking to a loan representative or financial advisor regarding your specific needs. You may also want to contact your tax advisor for additional tax information.