The honeymoon period is officially over when newlyweds start talking about finances. Jokes apart, there are a few tips that I would like to share for newly married couples. These are-
a) Discuss your financial status: Discuss finances with your spouse as soon as possible. You’ll need to go over what accounts you have and how many loans you have to payback. You’ll also want to be clear on how you expect money to be handled. What you have, what you owe, what you spend, and how you feel about investing should all be part of the conversation. In other words, avoid financial secrets.
b) Understand financial goals: After you have determined your baseline financial status, discuss your long-term financial goals in-depth. Set some common goals, whether you’re buying a home, taking a yearly vacation, or planning for retirement. Work together to figure out what you can realistically afford. Make sure to write all of your goals down and review them periodically. You’ll have a much better chance at success if you do. Remember, though, this isn’t a one-time thing. Your goals and priorities will change, both individually and mutually. Revisit this conversation occasionally and make sure that you continue to be focused on your shared goals.
c) Build an emergency fund: An emergency fund is money that is set aside in case something expensive happens unexpectedly, such as a lost job, family illness, natural disaster, or a major home repair. Your aim should be to save at least 6 months’ worth of household expenses for the emergency fund. Building an emergency fund should be a priority because it will bring financial security if and when disaster strikes.
d) Create a budget: Start by reviewing your joint expenses over the last few months to determine how much you’ve been spending and if you need to bring that amount down. Add your essential costs — housing, transportation, utilities, groceries — and discretionary spending — gym, shopping, entertainment, etc. Then, you could establish limits per category that you create according to your after-tax income. You need to make sure you stay within your spending allotment and adjust accordingly as your situation, expenses, or income changes.
f) Invest in insurance: When you get married, it is important to review, update, and in some cases purchase different types of insurance, including life insurance, health insurance, etc. Some insurance coverage may be provided by your employer. But if you’re both working, make sure to review your coverage and ensure that there are no areas of overlap. For eg: If you both receive health insurance through your employer, see whether it makes sense to be on the same plan in terms of the best coverage and costs.