Marriage is not only a union of two souls, it in fact, marks the beginning of a beautiful partnership. Of course, weddings come with their share of expenses—often generous ones. However, that’s only part of the story, not the entire one. Newlyweds should not only take care of their emotional needs, but also their post-wedding financial needs. It is essential to align your money habits, goals and responsibilities. Doing so will help couples build and lead a stress-free and prosperous life together. Yes, we are very much talking about newlywed financial planning here. Financial planning can sometimes make couples feel they need to overly restrict their spending, which isn’t always the case. In fact, financial planning is more about being clear about their funds and expenses and trusting each other in the process. Not having clear financial plans in place may lead to conflicts and problems after marriage. If you agree to what we are trying to say, then keep reading this post.
In this post, we walk you through some of the best steps to manage finances, reduce conflicts and plan confidently for your future. Alright! So, let’s get started…
Tips for Newlywed Financial Planning
Here are some of the tips you can follow to streamline your finances and effortlessly achieve your short-term needs and long-term dreams after marriage. Take a look…
1. Talk About Finances Openly
More often than not, couples avoid discussing or having money conversations, which is undoubtedly the first step to conflicts. Instead of avoiding, face it. Have an open money conversation with your partner to-be. Communicating clearly is the first steps to successful newlywed financial planning. We understand that money is an emotional topic, often shaped by upbringing, experiences and personal beliefs. But ignoring this topic won’t help you much, instead it will lead to greater misunderstandings later.
Things to discuss early on:
- Current income and job stability
- Existing savings and investments
- Outstanding debts (property loans, credit cards, student loans or personal loans)
- Spending habits and financial priorities
- Financial fears and expectations
Talking about all of these will help you gain deeper understanding of your partner’s financial habits and approach. Moreover, it is essential that you discuss it all with empathy rather than judgment. The goal to understand each other’s financial mindset not to judge.
2. Discuss How You Two Plan to Manage Money Together
There’s no fixed approach to managing finances as a couple. Each couple has unique financial habits and approaches. You can design a unique system for yourself based on your financial habits and approach. However, the right system is the one that feels fair, transparent and stress-free for the newlyweds.
Her are top three approaches experts suggest:
Joint Accounts: You two can choose to have a joint account for shared expenses, savings and investments. Doing so will allow you two to have the feeling of unity and help each other manage funds seamlessly.
Separate Accounts: A joint account needs trust between two partners. However, if you value financial independence, then having separate accounts and split shared expenses is a great option.
Hybrid System: This is one of the most popular and workable options among couples planning to manage their finances. In this, you open a joint account for your household expenses and savings. However, your individual accounts are separate for handling personal spendings. This offers both balance and flexibility and help maintain peace and harmony.
Choose anyone of them after a thorough discussion and determining which one works best for you two.
3. Create a Realistic Household Budget
Creating a household budget is one of the most important parts of newlyweds financial planning. Knowing where your money goes helps you make smarter decisions together. Here is how you can a newlywed budget:
- Calculate combined monthly income
- List all the fixed expenses (such as EMIs, utilities, insurances, monthly household expenses, rent and so on)
- List down variable expenses (such as, groceries, dining, entertainment and so on)
- Allocate funds for savings and investments
- Set aside an emergency fund contribution
Create a reasonable and realistic budget that doesn’t feel too restrictive or tough to maintain. Think carefully, consider each aspect of your life (even fun and entertainment) and accordingly design your budget.
Read More: 5+ Essential Tips To Wedding Budget – You Need To know
4. Build an Emergency Fund
You may want to buy a luxury apartment or an exotic car immediately after getting married. But that’s not the right approach at all, especially if you have limited earnings. In such a situation, newlyweds are advised to build an emergency fund. Building an emergency fund is like building a financial safety net for unexpected times, such as job loss, medical emergencies, urgent travel and so on.
Here is how you can build your funds for emergency situations:
- Save at least 3–6 months of living expenses
- Keep the money in a liquid, easily accessible account
- Treat it as non-negotiable (this means come what may, you won’t spend it until really necessary)
- Keep the money in separate account and strictly avoid spending them otherwise.
Having fund for emergency situations will not only help reduce stress, but will also prevent you from going into debt during crises.
5. Tackle Debt Strategically
If any of you already have debt, try handling it together. When you tackle it together, you can clear the debt much sooner and with far less stress. Here are some top tips you can follow to manage your dept strategically:
- List all debts with interest rates and balances
- Pay off high-interest debts first
- Try making part payment as it reduces both interest and tenure
- Consider consolidating loans if it reduces interest
- Avoid taking new unnecessary debt
Following these tips will help you handle depts more smartly and have more peace and harmony at home.
6. Set Short-Term and Long-Term Financial Goals
Setting short-term and long-term financial goals is yet another important step in newlyweds financial planning. Having these two goals clear will allow you be more motivated and focused. Short-term goals include goals that you want to achieve in 1 – 3 years of your wedding. While long-term goals are the ones that you plan to achieve in 5 to 15 years.
Some of the short-term goals include:
- Planning a honeymoon or travel
- Buying a car
- Creating an emergency fund
- Buying new furniture for your home
- Buying a new gadget or home appliance
- Renovating your home and so on
Some of the long-term goals include:
- Buying a home
- Acquiring a land
- Children’s education
- Planning for retirement
- Building wealth
- Creating passive income source
- Starting a business
Write these goals down or create an excel sheet with clear timelines and estimated costs. Make sure to review your goal list or excel at least once in six months or year as priorities keep changing.
7. Start Investing Early
Some couples keep waiting for the best time to start investing and that’s the biggest mistake they do. Understand that starting investing as you start your life as couple is the best time. Starting early allows compounding to work in your favor. Moreover, it allows you to achieve your goals without any hassle.
Basics of investment for newlyweds:
- Decide how much risk you’re both comfortable taking
- Diversify across asset classes (equity, debt, gold, real estate)
- Consider investing in SIPs or systematic monthly plans
DON’Ts to ensure successful investment:
- Do not ever take any decision in impulse
- Do not take emotionally-driven decisions when investing money
If investing alone seems like a task, then consider consulting a financial advisor. They will create a robust plan fitting to your goals, budget and risk tolerance.
8. Get Insurance Policies
Insurance policies turn out to be great saviour, especially in times of need. Therefore, all newlyweds looking for proper financial planning are advised to invest in insurance policies. It protects your family from unexpected financial burdens and prevents you from getting into debts.
Essential insurance policies include:
- Health Insurance: Popular options include individual or family floater plans
- Term Life Insurance: Ideal for newlyweds with only one partner earning
- Disability and Critical Illness Cover: Optional but investing in it can offer great value in future
- Property and Vehicle Insurances: Offer you coverage for unexpected damages
Invest in pure protection plans for effective and affordable outcomes.
9. Plan Your Taxes Wisely
Smart tax planning can help couples significantly. Hence, you are advised to plan your taxes wisely and as a team. Doing so will help you save more and invest better. Some of the smart tax planning tips include:
- Understand tax benefits on joint investments
- Utilize deductions under applicable tax laws
- Plan investments before the financial year-end
- Keep all your documentation organized in secure place
Proper planning not only ensures compliance, but will also help maximize your savings.
10. Stay Disciplined
It is very easy to go off-track, especially if you have extravagant all your life. But don’t let your temptations take control on you and affect your financial planning at all. Stay disciplined and keep following the financial plans as you have created in the first place. Sticking to your plan religiously will help you two build a more secure and joyful future together.
11. Honor Individual Financial Freedom
Sharing financial goals does not at all mean to ignore individual financial freedom. Instead, it is more about honoring each other’s financial independence and personal choices. Allow space for individual spending without guilt or explanations. Couples are advised to set a monthly personal allowance for themselves to prevent conflicts and create a perfect balance and harmony in relationship.
12. Review and Adjust Your Financial Plan Regularly
Like any other plan, newlywed financial planning also keeps evolving with time, responsibilities and financial conditions. Hence, you are advised to revisit or review your plan at least once a year. Reviewing your financial plans on a regular basis will keep them relevant and effective. Most important aspects that you will need to review regularly, include your increased expenses, income changes, investment performance, insurance appropriacy and progress toward achieving your financial goals.
So, these are the top tips to create a robust financial plan to have a great future together. Aside from that, there are certain mistakes that newlyweds should be aware of, which we have outlined in the next section. Read on…
Common Newlywed Financial Mistakes to Avoid
Here are some commonly made couple financial planning mistakes that you should avoid at all cost. Take a look…
- Not discussing money openly
- Overspending on lifestyle upgrades
- Taking money topic as negative thing
- Not creating a backup for emergency situations
- Depending entirely on one partner for finances
- Keeping investments for later times
- Not trusting each other when creating financial plans
- Avoiding short-term and long-term goals
These mistakes can cost you a lot of your peace and relational harmony. Hence, you are advised to avoid them. Doing so will not only help you strengthen your finances, but will also help you build a stronger and harmonious life together.
The Bottom Line
So, this is all about the newlywed financial planning for couples. Hopefully, this article has been informative for you and helped you have a clear understanding of financial planning. Newlywed financial planning isn’t just about money goals, in fact, it is more about union, trust and vision. By communicating openly, setting clear goals, managing risks and planning ahead, you would be able to build a secure and harmonious future as couple. Make sure to start early investments and stay flexible with your financial plans so that nothing in the process feels too restrictive or unnecessarily tight. You can even use technology to manage your finances. There are numerous free tools available for budgeting, investing and tracking expenses. You can use them to track your finances and understand how your planning is working in your favor. Also, do align your money with values for more joyful and stress-free future! Happy Wedding & Happy Financial Planning…
