The first couple of years of marriage are a period marked by big changes. There’s a difference between being in a relationship and starting a family, and couples need to adapt to this new reality. This is especially true when it comes to running mutual finances. It isn’t exactly the most romantic subject to discus, but it’s very important for couples to do so in a frank and open manner. The median age for the first marriage is increasing, which makes things especially difficult because of the increased personal income and assets you need to consider when making a joint budget.
Make a joint budget
Knowing where you stand financially is the first step towards making any further plans or investments. Start by calculating joint net worth – go through all of your bank statements, credit cards, loans and assets and see how it adds up. Then calculate your actual monthly (or quarterly) incomes and expresses. It’s best to divide these into two sections: fixed income and expenses, and the ones that can vary. This will give you an idea of where you can cut back and what’s beyond your control. It’s crucial that you do this together and share the financial burden.
Update your wills
It may seem like it’s too early to discuss these matters, but it’s usually a simple procedure and things can get really complicated if something happens and you didn’t arrange things in time. Start by changing the beneficiaries on all your accounts (that means investment, savings and insurance policies –personal, home and the one for your car). This takes care of the money and the will is there to take care of children, designate a guardian and help you avoid unnecessary tax issues.
Invest in experiences
It’s crucial, especially for a young couple to share and embrace experiences together. Dedicate at least a portion of your income to trips and vacations. That’s how cherished memories are formed and travel dynamic changes drastically when the kids are born (it’s still fun just a bit less romantic). Travel doesn’t have to be a huge burden on your budget –layby holidays allow for monthly payments without interest, and there are affordable deals if you book the holiday in advance.
Financial investments are not the biggest concern of newlyweds – paying off debt, creating a savings account and finding a new routine are usually at the top of the list. However, it’s never too early to start investing in your future. Even the safest investments involve a certain amount of risk and people react to risk differently. It’s perfectly possible for a couple to get along when it comes to everything else, but to approach risk and investments in different ways. Talking to each other and making decisions together is the only solution. Traditional IRA accounts are probably the safest bet.
Review and revise
Plans made during the first year of marriage aren’t set in stone. Things change and they change pretty fast. There are going to be new job opportunities, kids and probably a few rough patches. Make it a habit to review and revise your plans and routines on a regular basis. Take it seriously, make a schedule and stick to it. Twice a year is probably a good place to start if there aren’t too many unforeseen events in that period. Don’t feel bad if things don’t workout exactly as you planned – change is completely normal.
Marriage is about honesty, compromise and sharing. All of these qualities are applicable to business partnerships as well. The most important advice for young couples would be to treat their financial issues as any other parts of the relationship and approach them as a team.