Managing your money by yourself can be hard by itself but throwing marriage into the mix brings it to an entirely new level. You and your new spouse have both done things your own way in the past, and it’s often hard to start working together. Money can be a challenge to many marriages, and it’s a common reason for divorce. The good news is there are ways to work together, and it starts with having an honest conversation with each other.
Discuss Financial Goals
Take some time to talk about your financial priorities. It’s important to ensure you have basics, like an emergency fund and retirement plan. An emergency fund will prevent you from going into debt for an unexpected expense. Setting aside money for retirement will help you reach retirement goals when the time comes. Another goal to focus on is getting rid of debt. The first area to focus on should be high-interest debt, like credit cards.
If you have student loan debt, you can refinance that with a new loan to cut down on monthly expenses. You can see if refinancing student loans with NaviRefi can get you a better interest rate or give you more favorable repayment terms. After you have covered these basics, you can talk about other goals as well. Do you want to go on a vacation or buy a home in the future? Take some time to write down all your goals and agree as a couple on which should be prioritized. If travel is important to both of you, you may put more into your travel fund.
Determine if You Will Combine Money
It’s a good idea to take some time to think about whether or not to combine your finances. Depending on your situation, this decision will look different for each person. Sometimes couples decide to keep things separate and only have a shared account or two. Other times, couples co-sign on everything and have shared credit cards and bank accounts.
Be Honest with Each Other
Whether or not you decide to combine things, if you want to make sound money decisions, it’s important to be honest with each other about your situation. If one of you has a lot of debt, you need to bring this up with your spouse. Of course, you can’t be honest with the other person if you are not first honest with yourself. Many are in denial about their debt and avoid looking at it because they feel guilty or afraid. If you are not sure where your own finances stand, it is time to take an honest look at them. When you talk to your partner about your finances, it’s important to be judgment-free. Even if your spouse has made poor decisions in the past, be kind in your communication so you can both come up with a plan moving forward.
Create a Budget Together
When you get married, it becomes even more important to create a budget. It might not be pleasant at first because budgeting is stressful for lots of people. It might take time to figure out how to agree on your budget. You’ll start by combining all sources of income after taxes and benefits are taken out. You can then assign each dollar a purpose, including savings. There should not be any money or expenses left over after creating your budget. This prevents overspending, and when you both agree on the budget, you can hold each other accountable.
Check in with Each Other Often
One of the hardest parts of managing your money together is sticking to what you have agreed upon. Both of you need to review your spending and budget, talking about money each month. You might consider meeting once or twice a month to talk about your money and go over how well you did that time. You may realize you have been overspending in a certain area and want to cut back. On the other hand, you may find one portion of your budget no longer stretches far enough to meet your needs and must be reevaluated. Your situation will continue to grow and change, and your budget will need to as well. Being able to work together and communicate openly will lead to success in your finances.