Before you started talking about marriage, you and your partner likely had some genuine “life” talks, from where you’ll live to if and when you’ll begin a family.
One very important part of the discussion is money, because in order to achieve any goal—both big and small—you need to keep a record of what you have and how much you need to get there. Truth be told, money is an unavoidable topic for all couples, and getting on the same page is crucial.
This is especially true when you’re just beginning your lives together; you want to set good financial habits now, or you risk falling into bad routines that will stay with you throughout your marriage.
Here are top 5 mistakes newly weds make when they begin the journey of their lives.
Mistake #1: You’ve never discussed your spending habits or how much debt you have.
Lots of couples avoid talking about money, including how much debt they carry, what they consider a big purchase, and how much is too much to spend on things like travel, clothes, mobile phones and gadgets.
Sometimes this is because one person fears being judged; other times it’s just a lack of interest in personal finance.
Either way, the first step in opening a dialogue is just asking each other a few questions:
What was your family’s attitude toward money while you were growing up? What are your short- and long-term financial goals? Where do you stand on opening joint accounts as opposed to keeping funds separate? Then talk numbers, and be as up front as possible.
It is always very good to be open with your partner as regards financials to avoid future problems.
Mistake #2: You haven’t set a budget, much less stuck to one.
Make it a priority to sit down and create a monthly budget together. Even if your attitudes toward money are on opposite ends of the spectrum, it’s important to agree to a basic blueprint for spending and saving. Some marriage and family suggests the 50/30/20 approach, where 50 percent of income goes to necessities, 30 percent is earmarked as “fun money” to spend however you like, and 20 percent gets deposited to savings and investment accounts.
Organize your finances with spreadsheets like Microsoft Excel or keep a record book. From there, make adjustments as necessary to keep you on track.
Mistake #3: Your rainy-day fund is pretty much nonexistent.
Life is full of surprises, and the best way to protect yourself from unforeseen expenses is by having a healthy savings account to tap into when you need it. Experts recommends building up three to six months of living expenses. This funds should only be touched when the needs arises.
Mistake #4: You spent more than you should have on a house or car.
It’s easy to get excited about purchasing a brand-new home or car together. But beware the temptation of using your newfound two-income status to justify paying for more than you can afford. Some couples, after the wedding ceremony start spending big on getting an apartment and also a new car and forget there are other areas that also needs focus.
Don’t get me wrong, buying a new car or paying for a new apartment is not a bad thing but cost on securing this should be moderate. Flexibility is key as you think about the future: Do you or your partner plan to go back to school or start a business? Will you have enough saved up for your future kids’ college tuition? Don’t overspend now if you want to keep your options open later.
Mistake #5: You don’t have a plan for the future.
Taking the time to discuss what happens in the event that if either of you is unfortunately involved in a life threatening situation. Would you actually have peace of mind that you’d be leaving your partner in the best possible position. Update your beneficiaries on retirement and other investment accounts, evaluate and amend life insurance policies.
And remember: Whatever does or doesn’t happen, keep the lines of communication open.
Culled from theknot