After the euphoria of the wedding, all the attention, the ceremonies and festivities, comes real life; the marriage. Money matters are an important aspect of everyday life in a marriage; yet all too often, not enough attention is given to this subject. It is one of the leading causes of friction and troubled relationships. It must be handled with love and care, early and consistently. Managing your own money can be challenging enough; now it is about both of you and the family you intend to build. Here are some things to consider as you plan to build financial security together:
Talk about money
Communication is one of the most critical ingredients for a successful marriage. Ideally you should have been talking about money well before you tied the knot, certainly as soon as you both realised the relationship was serious. But even if you didn’t broach the money subject before now, not to worry; get started immediately.
Ideally you should have a fairly good understanding of where you stand financially as a couple. Look at bank accounts; debt that you may be bringing into the marriage and make plans to deal with it; insurance; your investments, business interests, your individual and joint plans and prospects. Other important questions include the number of children, the sort of education you desire for them, where you will live, any dependents, whether relatives will live with you etc.
View yourselves as a team. Periodic money date nights say monthly or quarterly, strengthen communication in the marriage and reduce money conflicts. Such meetings will cover bills to be paid, home repairs, holidays, etc. Money can be a touchy subject so it is important to try to understand your money personalities. Your attitude to money may stem from the way your parents regarded money, your background, and life experiences, both good and bad. You may be very frugal or even a miser wedded to a spendthrift. If you feel your spouse’s spending is out of control, avoid being confrontational or accusing.
Who pays for what?
Money management in a marriage should involve both parties working together and sharing responsibilities in decision-making, budgeting, and bill paying. If one party earns much more than the other, or one is a homemaker, then naturally they will carry the lion’s share. Both of you should be aware of the overall financial picture.
Discuss family goals
Even as a couple, it is healthy to have individual aspirations. Discuss your short term goals; what you want to achieve in the first year of your marriage, medium term say in about five years and your long term financial goals. For example, you would like to own a property or move from your rented apartment to your own property in five years. Or it might be about reducing or paying off debt in two years. Perhaps one of you needs to go back to school. Without a clear plan to achieve certain milestones, you can’t achieve much. By writing goals down and reviewing them periodically, you will have a better chance at success.
Create a family budget
A budget is one of the most basic tools of money management. It sounds tedious and boring but it really can be a lifesaver. Limit the amount you spend in certain budget categories, such as food, dining out, entertainment, clothing, travel etc. Build in a buffer for unexpected one-off expenses. It won’t be perfect in the early days, so you will need to make adjustments.
It’s not enough to just make a budget. Are you actually staying within the limits? There are numerous budgeting apps you can download that make it so simple to keep your spending in check. You might want a simple spreadsheet like “Nimi’s Personal Budget” (available at www.moneymatterswithnimi.com) that tracks your monthly spending and sums it up at the end of the month. Find the tool that works best for you both.
Build an Emergency Fund
An emergency fund should be a top priority; it will bring some financial security and help protect your relationship during challenging times. This is money that is set aside should something happen unexpectedly – a major house repair, a medical bill, car problems, job loss etc. Try to build at least six months of your household expenses to tide you over.
Place this fund in the money market where it is easily accessible and earning some interest. Avoid placing it in your current account or in account tied to your debit card or you will be tempted to make purchases or to stop at an ATM to withdraw cash. A money market mutual fund is an ideal place to park such funds, as you can liquidate units within two to three days and earn a decent return at the same time.
Joint, separate accounts or a combination?
There is no hard and fast rule about opening a joint bank account or maintaining individual accounts after you are married. Many couples opt to have a joint account for joint expenses and separate accounts for individual purchases. It is only natural to desire some level of independence where you can spend money without having to account for every expense. It can be disconcerting though, if your spouse spends a huge amount of money without discussing it. Try one method; if it doesn’t work, change it.
Deal with your debt
Debt can be a burden on a single person. In marriage you are both responsible, and so must be deliberate about addressing it, particularly if it is not debt that is supporting an asset that will appreciate in value such as property. For some time you may have to dedicate part of your income to ease the pressure. Tackle the high-interest or the most urgent debt first. Living a debt-free life is not only healthy for you financially, but it is also healthy for your marriage.
Your approach to risk
You may be someone who is comfortable with risk and that may even bet all your money on an idea and be married to a risk-averse spouse who will happily leave all the money in a savings account! Or one might want everything in the stock market whilst the other wants to diversify with property, bonds and art. Talk it over and find some middle ground. You may both be out of your comfort zone and there will be need for compromise.
You both bring your respective strengths to the table. Be aware of your own weaknesses and strengths, and leverage on the strengths of your spouse to really benefit from your partnership. There is much to learn from each other.
Save for Retirement
Talking about retirement may seem absurd but even as young newlyweds, retirement will come and it is to start planning from now. If your employer is part of the contributory pension scheme, that is a good place to start. Many young people are self-employed and often neglect this most important aspect of financial planning. Even if your income is irregular, it is important to be deliberate about establishing a pension fund.
Honesty and transparency are ideal in a committed marriage. Lying about money or hiding significant purchases can have repercussions, as it builds mistrust. Once those seeds are planted it can put a strain on even the strongest relationship. The money dates are a good time to review things. Accusing or making your spouse feel bad will force them into secrecy. Your own particular circumstance will determine the best approach.
For richer for poorer
When we recite those vows at the altar, with videographers, cameras and the congregation, it can all be overwhelming for a couple. Yet those words are so profound. Start off on the right footing with a solid plan to deal with budgeting, borrowing, spending, investing and giving. By embedding good money management habits as a newly married couple you give yourself a good chance of living happily ever after.