Thank you to our Guest Contributor Kay Carter for this amazing article………
Being a newlywed is a fun and exciting period – you’re starting to get to know each other more deeply, perhaps you’re finding a new home together, and you’re now sharing responsibilities.
With that comes a learning curve of managing finances together along with paying off that wedding and honeymoon bill.
To ensure your marriage is starting on the right foot, taking a look at these tips for budgeting as a newlywed.
Be Open About Money…
Depending on how long you’ve been with your new partner, how open you already are about money may vary, especially if you paid for your wedding out of pocket.
For some, however, the subject of money may have never even come up. Now is the time to be open and honest about finances.
This includes everything from discussing each other’s debts, determining a budget for combined income, talking about what money was like growing up, and learning how you currently manage money.
This is a great opportunity to learn more about each other and brainstorm ideas to become more financially stable.
Combine Your Finances…
This may be a tricky subject for those that have lived primarily independent lives up until marriage, but discussing finances is an important subject.
Even if you both still have separate bank accounts, it’s a great idea to at least have a shared account for bills and shared savings.
This doesn’t mean throwing all your money into one pot.
In fact, this is not advised. Instead, ensure each person has cash for their own enjoyment instead of having to rely on the other for something as simple as a haircut.
Establish Priorities…
Get together and discover what goals you have for the future and prioritize.
Do you already own a home?
If not, do you want to?
Are you planning on having kids?
Consider bringing up topics like saving for retirement, if you aren’t already, and getting rid of unnecessary debt like credit cards and payday loans.
You’ll also want to build up an emergency fund for emergencies.
Sit Down and Do the Math…
This may seem like a simple task, but you would be surprised at how often calculating your income and expenditures is cast aside. S
it down with your partner, calculate your total income, and subtract all your expenses.
According to House Method, you’ll be able to see where you’re spending too much money and find ways to save through a monthly budget.
For example, if you find that you’re spending too much on utilities, consider making small changes, like upgrading to LEDs or increasing the temperature on your thermostat, to save a little more on your energy bill each month.
The most popular approach to budgeting is the 50/30/20 method.
With this strategy, 50% of your income will go to needs like rent and utility bills, 30% will go toward your wants like eating out and shopping, and the final 20% will go toward savings and debt repayment.
Be sure to track your progress and readjust regularly, especially if you have finally paid off a debt or have an adequate amount of money in your emergency funds.
Make a List of To-Dos After Marriage…
The list of tasks that need to be made after your wedding may vary.
These tasks can include anything from adding your spouse to your health insurance, updating names on pertinent documents like your license and social security card, creating a joint bank account, and updating your taxes.
Be sure to evaluate all of your to-dos to determine what makes the most sense.
For example, you may want to keep your health insurance separate if it’s less expensive than combining your insurance.
The same may go for filing your taxes jointly as opposed to separate.