Most of us take an oath, “for better or for worse, for richer or for poorer” while getting married. But, in the emerging society where both the husband and wife are working professionals, many couples today can’t seem to survive and face problem either richer or poorer due to bad financial management skills.
Some couples decide that they’ll stick to their own individual ways of managing money, whereas others may take the entire responsibility of managing finances on their own shoulders or shove it onto their spouse.
Some spouses might even lie to their partners and indulge in overspending. The bottom line being, all these practices will lead to a failed marriage where the word, trust, will have no meaning.
When both you and your spouse spend half of your life’s savings and all of your family’s funds on a two-day event, it becomes important that you manage your funds wisely for at least the initial couple of years of marriage.
Even the industry expert also guide us.
Here we tried to cover all aspects of money management tips in 10 pieces of financial advice.
So, here are some smart money management tips for the newlyweds:
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Be open about finances
It is best if you start talking about finances before tying the knot, but in case you haven’t, it’s never too late to start. Be open about your bank accounts and the debt that you both carry.
Also, make it clear from the beginning how you expect the finances to be handled.
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Write down goals
Once you have settled your baseline financial conditions, it is time to discuss long term financial goals. Like at what age do you both plan to retire and how much money you aspire to earn till that time. Also, you should both discuss the investments plan to make etc.
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Discuss bank accounts
There are both advantages and disadvantages of opening a joint bank account and managing your individual accounts. Combining your bank account with your spouse’s helps in simplifying finances and also builds trust in the relationship.
On the other hand, managing your separate accounts and having some level of independence and protection might also suit you. You can even do both.
The key is to discuss and find a mutually agreeable solution.
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Build a rainy day fund
If you don’t already have an emergency fund, take this on top priority. If one thing that is certain in life, then that is uncertainty. Make sure you both have some liquidity in case things take a turn for the worse.
An emergency fund is the money kept aside in case something unexpected happens, like loss of job, illness or some major home repair.
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Design a budget
Having a budget and sticking to it is one of the most important things you both can do to stay out of debt.
Set aside a fixed amount for how much are you going to spend on various factors like food, basic necessities and entertainment each month.
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Track and stick to the budget
Creating a budget is of no use if you don’t stick to it. You need to stick to your spending allotments and you need to keep on making necessary adjustments as your expenses, situations or income changes.
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One effective way of sticking to the budget is using an envelope system. Envelope budgeting system requires you to literally keep cash aside for various expenses and once the cash in one envelope is over, cut down that expense for the rest of the month altogether. This system is extremely useful for young couples with lower incomes who must be careful not to overspend.
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Weekly Financial meetings
Decide to have small weekly important money and budgeting meetings to discuss on the expenditure of past week and how to move forward in the next week to stay on track in terms of spending.
Discuss how the budget looks for the month and if there are any upcoming bills in the pipeline. Also, discuss how well you’re doing in line of achieving your financial goals.
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Include anything related to funds in these meetings and carefully plan your way forward for the short and long term future.
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Save for retirement
You might be young and carefree at the moment and retirement might seem like a place on the faraway horizon at this point of time, but you’ll need to remember that it will come eventually and if you don’t start saving for it now, you might not be able to set aside enough funds for the time when you finally reach that place on the horizon.
You need to make sure that you become financially stable for your retirement. If you work for a company that offers retirement benefits, try to maximise on this opportunity.
But, if you are unable to do that, even keeping INR 1000 aside for your retirement each month, will help a lot.
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Get out of debt and stay out
Needless to say, we all fear debt. Debt can be problematic for one person, but it is a devastating when you are married as two people are responsible for paying the money back.
Start your marriage in a positive way by eradicating all previous debt and make sure that none of you gets into it again.
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Discuss with your spouse and work out a plan to stay out of debt. Having a debt free life is healthy for you financially and is also good for your marriage.
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Share responsibilities and work as a team
Sharing financial and personal responsibilities with your spouse can work wonders for your marriage.
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Don’t take up or shove all the financial responsibilities on one person, instead work as a team when it comes to smart financial decisions.
Both husband and wife need to have a say in decision making, budgeting and paying the bills. Also, the most important part is being truthful to each other and not hiding or lying about any expenditures.
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