Most newlyweds are caught up in a whirlwind of emotions when they first get married—the wedding, the honeymoon, and the overall excitement of starting their lives with someone they love. A huge part of starting your life together means discussing finances. Indeed, money management for newlyweds is important to a successful marriage, and you and your new spouse must have a firm understanding of your shared financial goals. Money management for newlyweds can be difficult, but with some thought and plenty of open communication, you can get your finances to a great place.
Communicating openly about finances
Open communication is the most important aspect of marriage. This principle applies strongly to finances. You and your new spouse need to be on the same page regarding your financial future, and the only way to do that is to make sure you speak about this critical area of your marriage.
Talk with your spouse about your goals and where you want to be financially. While 100% agreement isn’t necessary, you’ll need to know what you expect from each other regarding savings, planning for major life events, and preparing for the future. This means more than just one partner telling the other how their finances will be run: It means listening honestly and openly and adjusting needs so that both of you are happy.
You also must understand expectations in terms of overall spending levels. How much will you spend on luxury items? How much will you save? Disagreement over finances is common in marriages, but disagreements over spending levels are particularly challenging.
Setting shared financial goals
Total agreement over what you spend isn’t necessary, but you’ll need common financial goals. These include:
- How big will your emergency fund be?
- How much will you spend on luxury items, like restaurants or vacations?
- What will you be saving for? A new house? New car?
- When do you want to retire, and what do you need to do to prepare your finances appropriately?
Shared values drive these goals, and the only way to reach them is to ensure that you and your partner have the same values and goals. If you don’t, compromise will be required.
Creating a joint budget
Some couples merge financial accounts, while others separate their personal budgets. At a minimum, you and your new spouse should create a joint budget that covers joint expenses like groceries, utility bills, rent or mortgage, and more.
This budget should be realistic and conservative. Based on previous paychecks, it should come with solid estimates of how much money you will bring in every month. It should also contain realistic estimates of expenses.
Once you have a joint budget, you must stick to it. Budgets should always be conservative. (Finding out you have more money than expected is a happy surprise. Finding that you don’t have enough is distressing.) You’ll need to use a program, like Quicken, to update your real expenses regularly and categorize them appropriately. This regularly updated budget will give you a solid grasp of where you spend money and what areas you may need to cut back on.
Agreeing on spending priorities
Budgets are numbers, but your spending priorities drive them. This is another area where you and your spouse must be on the same page. Where do you want to spend money? Would you rather eat out or save for a new house? Would you rather buy a new car or save for a vacation?
The budget you design should reflect your spending priorities. You must regularly update that budget and ensure you are spending within those priorities. Fortunately, a well-managed budget will provide daily updates about how successfully you meet budget priorities, enabling you to adjust your spending habits as needed.
Planning for major life events
The ability to meet long-term goals will majorly impact your happiness as a couple. Meeting these goals means getting on the same page as your spouse. This involves open and honest communication. Where do you want to be from a financial perspective in five years? Ten? Do you want to save for a new house or potentially take out a loan to expand on your existing property? When do you want to retire? How much do you want to save for your children’s education?
Once you agree on these major life events, you can speak with financial experts to get a better idea of how much you will need to save to meet these goals.
How Village Bank can help
Money management for newlyweds is often challenging, but here’s the good news: You’re not on your own. If you are a newly married couple needing assistance plotting out financial goals or preparing for the future, we can help. Contact us today, or visit any of our nine locations throughout Virginia to learn more about how we can help you meet your financial goals.