10 Smart Money Tips for Couples

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A lot of times, two people come into a marriage with different money-related values: one may be a cautious spender while the other may spend as if there is no tomorrow; one may be dedicated to saving and investing to meet financial goals, while the other might live just for the day and believe that the future will somehow take care of itself.

Getting engaged and married is an exciting time in anyone’s life. It can also be a time of intense stress as you try to plan a wedding and adapt to living with your significant other. Adding money to the equation only makes things more complicated.

1. Create a Budget

Couple should take responsibility in creating a budget and also sticking to the same. This is will help in avoiding situations such as debts. Never get into commitments by foreseeing income. Plan it according to what you have and how much you can afford. Budget designing should start from reviewing joint expenses. Taking records of last few months’ joint expenses will help in understanding and creating budgets. Unexpected or irregular expenses should be kept in mind while designing budget, these will include doctor appointments, routine car or bike insurance, maintenance and even special occasions.

2. Discuss your Current Financial Situation

Sit down together and discuss where you are in your finances currently.  Your individual and collective spending habits, personal debt, things you want to enjoy or purchase in the future (individually and collectively).  Also, discuss what you cannot go without. Take the time to speak and discuss your desires, dreams, and needs, even if at this stage they don’t seem to be heading in the same direction. And, remember to be patient with each other.

3. Sharing of Financial Goals

Communicating with our spouse about finances is not a walk in the park because our upbringing and experiences shape how we save, spend and invest our money. Still, it is important that a couple understands each other’s money habits, where they stand financially and are aware of their financial goals. These goals will usually tie in with expectations on whether a couple plans to have children, type of children’s tertiary education, owning a house, and even when they plan to retire.

When a couple has clearly stated goals, they can avoid unnecessary impulsive expenditure that may add stress in the relationship. Having common goals will also help set the parameters for the household budget, the need for sufficient insurance protection and a comprehensive financial plan to achieve their aspirations. Seeking the help of a professional wealth manager can help you set your priorities and achieve your goals.

4. Get Rid of High-Cost Debt

During your single days, you may have spent rather too freely and hence acquired high-cost debt such as personal loans and credit card debts. Though this could be a touchy subject, after marriage it is best to pay off these debts first either with the help of your spouse or without. You will not make any progress on the road to prosperity if you are simultaneously paying 16-30 per cent interest on high-cost debt while earning only 12-15 per cent on your investment portfolio.

5. Make a List of Financial Goals

Similar to discussing your financial priorities, talk about your goals for the future, especially financial ones. It will be much easier to reach your goals if you can work toward them together, and it can help reduce tension if you make sure you don’t have goals that directly contradict one another’s.

  • Do you want to live in a lavish house or a small one?
  • Would you rather rent or own your home?
  • Do you want to retire early or work full careers?

6. Avoiding Financial Infidelity

Financial infidelity might take the form of concealing a bank account or forgetting to notify your spouse of a significant expense. Two of the most popular money myths are not being honest about debts and under-declaring one’s income. This type of betrayal can weaken a couple’s trust and lead to a relationship breakdown.

Unless lying is “necessary” owing to circumstances such as a compulsive gambler as a spouse, honesty is still the best policy for a partnership.

For example, if you have a mountain of debt, it is preferable to be open with your spouse and work to pay it off as quickly as feasible.

7. Buy Health Insurance

Even if your employers provide health insurance, buy individual health insurance policies for both partners (and child, if any). That way you will still have insurance cover in case you give up your job or need medical treatment when you are between jobs. Once you have crossed the age of 40 and to keep pace with rising healthcare costs, supplement these stand-alone policies with a floater policy. You may also buy accident cover and critical illness policy for added protection.

Keep in mind issues such as the insurer’s policy regarding pre-existing diseases, sub-limits, exclusions, renewability and claim loading to avoid unpleasant surprises at a later date.

8. Retirement Planning

Retirement may seem distant to a newly married young couple. Still, it is prudent to start discussing your retirement expectations early and review them regularly. Work out the desired retirement lifestyle, the likely needs and wants, and match them with multiple income flows from a diversified portfolio of savings and investment tools.

It’s never too late the start saving for retirement, neither it is ever too early for the same. The earlier you start; quicker you might be able to relax. Plan for future, for children education, and also at the same time save bit by bit towards retirement. Contribute towards this as much as you are able to afford.

Additional contribution need not be in great amount. Even a small contribution every month can pile up to big savings during retirements. Moving aside a small portion will not be very difficult and might not impact your monthly expenses much, but in the long run it will be definitely turn out to be a good savings through the little amount that you kept aside.

9. Create Separate Bank Accounts and One Joint Account

This is one of the most important decisions the two of you need to make regarding your finances. Having your own money that you can spend however you want can lessen arguments about money. We disagree with the belief that having separate joint accounts lessens the sense of unity in marriage and shows a lack of trust in one another.

10. Invest to meet your Goals

Couples should divide their investment goals into short, medium and long-term goals. Saving and investing to collect the down payment for the purchase of a car (which can be met within two years) could be a short-term goal. Investing to start a family or to collect the down payment for purchasing a house could be a medium-term goal (two to five years). Saving for your child’s education and retirement are examples of long-term goals (above five years).

Financial planning for couples is a detailed and meticulous exercise. Goal-based planning can put a couple on the road to enduring financial freedom. It is important to get professional advice to do financial planning. You can find some good online solutions too. Whichever way you choose, be sure to adopt a goal-based approach to planning and investing. Shared values, co-operation, careful planning and meticulous execution are some of the elements that can help married couples achieve financial success.