‘From this day forward, for better, for worse, for richer, for poorer…’. These are words spoken by many newly-weds across the world. But how many actually live by them day-to-day following the excitement of the wedding, when the honeymoon’s over?
Here are some key ways for newly-weds to manage their finances.
1. Communication is essential
When addressing the topic of money, it is perhaps unsurprising that newly-weds can have very opposing views when deciding their financial future — after all, they have been raised differently and had different life experiences, focusing primarily on their own objectives, up to the point of marriage.
When you are just starting out, talking about money may not sound romantic. However, couples who have been together for years typically agree that their financial circumstances can be a source of strength and togetherness, or a force that can tear them apart.
As such, to build a solid financial future together, it’s essential for couples to talk to one another openly and honestly on all matters financial. From the very outset, communication is key for identifying common goals and in recognising and maintaining these financial aims and objectives.
2. Share financial responsibility
Couples should, in my experience of advising clients for many years now, share responsibilities when it comes to money management. They are advised to build a budget around shared goals and use this to plan how they can achieve their wants, needs, dreams and desires. These goals should always be reviewed by the couple jointly on a quarterly basis to ensure they are on track.
3. Emergency fund
Things can and do go wrong in life and it is essential that you have an emergency fund in place. Always have a cash buffer in case of any predicament that life may throw at you. Typically, three months’ salary is a good starting point. Money can be a source of enormous stress within a marriage, so having an emergency fund will help eliminate this.
4. Consider merging finances
It’s important to discuss your bank accounts and the merit of potentially merging some finances by having a joint account. This can be used for household bills or expenses and can make life more straightforward. Quite often, savings in a joint account grow faster. This makes it easier to later purchase big-ticket items.
5. Be realistic
Do not put off the inevitable. Don’t skirt around awkward subjects. Growing old together and enjoying a comfortable lifestyle require a great deal of thought and planning, from where you would reside in retirement to how much income you would need on a monthly basis. And as much as saving is important, it is also vital that you are both protected in the event of critical illness, total permanent disability, or worse, death. Newly-weds should review, update and maybe even consider different types of insurance, including life, health and disability insurance.
6. Take independent advice
The best way for couples to reach their long-term financial objectives — which are likely to have evolved since the marriage — is to seek independent professional advice. Much like a coach does for pro athletes, a good financial adviser can help newly-weds devise, implement and manage a sound, realistic strategy to hit their goals.
Financial planning, like marriage, is something that is built on trust and honesty and has to be constantly worked on to ensure a happy and secure future.
One last tip: Celebrate together as you reach your financial goals.
— The writer is Area Manager for global financial consultancy deVere Acuma
