Money and Marriage: 7 Tips for Planning Your Financial Future
They say, “Money can’t buy you love…”
Many couples start their marriage like a dream, only to be haunted and broken by money woes in the end.
It’s a harsh and sad truth, but financial mismanagement or financial changes after marriage can easily cause a conflict in your relationship.
The American Psychological Association (APA) reported that almost a third of adults with partners cite money as the major source of trouble in their relationship.
Admit it or not, financial stability is a crucial ingredient to a long and happy marriage, which is why couples need to work together in planning and securing their financial future.
From money talks to estate planning, here are a few useful money and marriage tips to help you get started on financial planning for married couples :
1. Discuss your financial goals and values
Talking about money and marriage with other people can be uncomfortable, even if that “other people” is your partner.
While both of you have common money and marriage goals – buying a house, saving for retirement, or your kids’ college fund, you may have different ideas on how to reach your shared objectives.
Also, just because you’re a couple does not mean you don’t have individual money goals anymore.
These and your potentially different values/approach to financial matters are the primary reasons why you need to have regular money talks to strengthen your relationship and figure out where you stand financially.
Leaving things unsaid may only cause you trouble and misunderstandings later.
2. Reduce or, if possible, eliminate debts
Getting rid of debts is the fastest way to becoming financially secure. But who doesn’t owe anything these days, right?
Still, as a part of your couple’s financial planning you and your partner should try to reduce your debts the best you can – starting with your credit card bill.
If you can, pay off your credit cards each month, and not just the minimum, to lower interest fees.
On-time debt and bill payments have a tremendous impact on your credit score and, consequently, your financial well-being.
3. Make wise investment decisions
As tempting as it is to grab seemingly lucrative investment opportunities right away, you need to learn to hold your horses and do some research first.
Another financial advice for couples is to keep in mind when it comes to investments is that it’s often better to think long term and maintain a balanced portfolio than to follow the latest trends.
Also, don’t put all your eggs in one basket.
Allocating your assets can increase your rate of return. An experienced advisor can assist you in choosing the right combination of assets to help you achieve your couple financial goals.
4. Start an emergency fund now
Life has a way of throwing curveballs when you least expect it, that’s why you and your partner need a financial planning workbook for whatever financial emergencies that lie ahead.
One of you may be out of employment all of a sudden, or your child needs immediate medical attention.
Whatever it is, having an emergency fund will keep you out of additional debt when something unexpected comes up and puts a strain on your finances.
Ideally, your emergency fund should be enough to cover your family’s living expenses for three to six months. Keep the money on a separate account to avoid using it for purposes other than emergencies.
5. Ensure your family’s future
What if something happens to you? Will your family be financially secure?
When it comes to protecting your family’s future, nothing beats having the right and sufficient insurance policies.
Insurance policies can provide you and your family with the financial safety net to survive tragic or unexpected life events.
You may also want to consider a personal umbrella policy on top of your standard life insurance or disability insurance coverage for additional protection.
Remember, though, that your insurance protection can change over time. Review it with an adviser every five to ten years or whenever a significant life event takes place.
6. Plan for your retirement
It’s easy to forget about retirement because it seems so far away. But if you don’t want to keep working ‘til you’re 70 because you didn’t save enough money, you better start financial planning for couples for your retirement while you’re young.
According to experts, you should at least allocate 15% of your income towards retirement.
You and your spouse can either save the funds in an independent retirement account (IRA) or contribute to a 401(k) sponsored by your employee.
A 401(k) is often your best bet if it’s available to you. Your employers will match your contribution up to a certain percentage, which means more money for your retirement!
7. Dabble in estate planning early
You need to have a will, whether you have kids or not. You see, if you die without a will, the court gets to decide how to divide your assets and may distribute it against your wishes or the wishes of your family members.
You don’t have to be extraordinarily wealthy or amass a fortune to start estate planning.
Estate planning tools such as living wills, trusts, and life insurance will protect your family and your assets when you no longer can.
There are, however, a lot of things to consider when creating a will or an estate plan. Thus, it’s in your best interest to obtain professional legal and tax advice, especially from an experienced estate planning attorney.
Estate planning is a continuous process that needs to be updated to reflect any changes in your money and marriage.
Beginning the process early in your marriage can give you and your spouse the protection and peace of mind that you need for a happier relationship.
Want to have a happier, healthier marriage?
If you feel disconnected or frustrated about the state of your marriage but want to avoid separation and/or divorce, the marriage.com course meant for married couples is an excellent resource to help you overcome the most challenging aspects of being married.