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Financial planning for newlyweds is a huge step, and it’s how you can start strong in your marriage.
Money plays a pivotal role in your life and your relationship.
I’m sure you’ve heard (and maybe seen) how money is one of the top causes of divorce and separation.
I argue it’s not the arithmetics of money but rather the mismanagement of financial intimacy in a relationship that messes thing up.
No one gets married with a plan to get divorced down the line, at least I hope not.
You want your relationship to blossom and grow old and grey together, right?
If so, don’t underestimate how money affects your relationship. Make it a priority to start your new journey together with money in the right way.
Table of Contents
Why Financial Planning For Newlyweds Is Important
Discussing money as a couple is a must!
Money is involved right through from the first time you meet until the day you walk down the aisle.
Plus it will carry on being a part of you as you grow your relationship and your family together.
Think about it, you need money for date nights, birthday and valentine gifts, plus the wedding you just had.
In fact, take the time to go through these money questions to ask your partner to get the money conversation going.
Despite this, money is not the focal point of a relationship, love is.
Money is simply a tool. A tool that you should use to build your life and future together.
As you start financial planning as newlyweds, you’ll build a manual for this tool called money to use in your marriage.
Financial Planning For Newlyweds
In relationships, people from different backgrounds and beliefs with different habits and behaviours come together.
Despite your love for each other understand you’ll have differences of opinions or behaviours, even with money.
At the highest order, the point of financial planning as newlyweds is so you both have a shared understanding of the role money plays in your marriage.
Shared understanding and agreement is the foundation of peace and happiness in relationships.
A sure way to destroy all forms of intimacy is to be married on paper but to live separate lives in reality.
Here are some action points for you to take with your partner to start financial planning in your marriage.
Analyse Your Financial Position
Take stock of your complete financial position.
Lay all the cards on the table and discuss every financial aspect of your lives.
You’re not making any decisions or amendments at this stage, this is purely a fact-finding exercise.
I’d still encourage you to do this even if you’ve already discussed some of these elements in the past.
This discussion should include your income, your savings and investments, your debts, your credit scores, and your bank accounts.
Also, include other financial commitments you have such as memberships you belong to or child support payments to your ex.
The outcome is for you to understand where you stand financially and see what you’re both working with.
Key Tips
- Be completely open and transparent about each of your financial positions
- Don’t allow judgement or jealousy to come in between the two of you. You’re partners, not competitors
- One way to bring most of this together is through calculating your net worth
Decide How You’re Managing Your Money
At the heart of managing money together is ensuring your living expenses are paid for.
There are various ways to budget as a couple, take the time to agree on what works for both of you.
You can split your combined bills down the middle and you each pay an equal share.
Or you factor in income and the one who earns more pays more.
Or you adopt the joint money mindset where your perception is our money rather than your money and my money.
There is no wrong or right, just what fits you and your partner.
Above budgeting your money, discuss and assign financial responsibilities.
This can include who’s name will be on the bills, who will look into the insurances, and who will take care of setting up the automated payments.
Key Tips:
- Decide how you’re managing your money based on what fits your relationship. You can amend this over time as you grow together
- I’d encourage that both of you be involved in managing your money. One of you shouldn’t carry the load on their own
- Don’t leave responsibilities to assumptions, have a clear understanding of who’s doing what
Set Up Your Money System
Once you’ve chosen method to manage your money you should set up a money system that fits your financial plan as newlyweds.
I would encourage you to set up at least three account types.
The first account type is for your combined fixed bills such as rent, utilities and insurances.
The second account type is for your variable expenses such as food, transport, and general shopping.
The third account type is for your savings.
Having an emergency fund will positively impact the way you handle money and make certain decisions in your relationship.
With each of these account types, you can have one or as many as you’d like.
You could have an account for each of the following – personal shopping, groceries and takeaway, and transport. It’s up to you.
The way you set up your accounts depends on your chosen approach to managing your money together.
Keeping your money separate will have a different set up than if you’re adopting the joint money mentality.
Should We Open A Joint Account?
We always get asked whether couples should have joint accounts.
Our view is that it’s more important that you have a joint understanding of money in your relationship than having a joint account.
We have joint accounts because we’ll both need access to the money such as for the food shop and our bills.
If you decided to split bills 50/50 and keep the rest separate, then analyse whether the bills account should be joint or not.
There is no right or wrong with having joint accounts. I’d say just ensure it fits your method of managing money together.
Key Tips:
- Set up bank accounts that fit with your way of managing money, and that align with your goals (talking about goals next)
- Discuss how you’re managing the variable expenses accounts for food, shopping, and transport. This is where money leaks usually are
- Only open joint accounts if they serve a purpose for being joint, there’s no wrong in not having joint accounts. We advocate for a joint mindset
Discuss Your Life And Money Goals
So far the approach has been largely about the present financial position and what you’re doing today.
This time we’re looking ahead. Take the time to discuss what your life and financial goals are.
Financial planning as a couple ensures you’re not just living month by month, but you’re aiming towards something.
The neglect of thinking of your future plans together could easily lead to you wanting different things from your life.
This escalates to you not being aligned in your direction of life, leading to all sorts of money issues couples have, which is what leads to divorce and separation.
Be open-minded about setting goals and don’t limit it to money goals. Money plays a part in all your life decisions.
How To Set Life And Money Goals As A Couple
Financial planning as newlyweds wouldn’t work without setting goals.
Think about the goals and aspirations you each have individually in the short and long term.
It’s up to you to set parameters for what short and long term mean.
Then come and discuss those together – do it over date night and keep it lighthearted and fun.
Identify which goals align with both of you and which goals are for one of you.
For instance, you after the first exercise you may have identified your partner’s in debt, so you set a goal to repay those.
You may decide that you’d like to travel to your home city or country more often.
Or that you’d love to start having children so you’ll need to buy/move into a bigger house.
Prioritise Your Goals
Prioritise these goals according to what matters most and what fits your current place right now.
Take into account what’s realistic according to your budget and finances.
We actually approach our goals similar to the debt repayment strategies of snowball and avalanche.
Snowball is when you prioritise by the smallest amounts to be saved first.
Avalanche is when you prioritise by the shortest time it would take to save for all our goals, which may mean starting with larger goals.
But it’s not about the money. Sometimes it financially makes sense to pay off your debts but other factors considered, it’s better to save for a car because of the value you’ll get from it.
Key Tips:
- When setting goals, do what feels right for you not by the so-called standards of society
- When discussing goals together, be honest about which matter to you and which don’t
- Align your budget and savings according to your goals
Have Regular Money Talks
Schedule time in your calendars to deliberately come together to have a discussion about your money.
Talking about your money regularly is what keeps you on the right path over time to be on the same page.
The reality is that life doesn’t move at your pace, but rather you have to move at its pace.
Things come up all the time that will require you to reshuffle your budget or tweak your goals.
Or you may wish to change the priority of one of your savings goals because it’s no longer a worthwhile goal.
The best way to stay financially connected and together is by having regular money talks together.
What Do Money Talks Involve?
At the very least, discuss your budget every pay cycle, whether that’s weekly, bi-weekly, or monthly.
Our budget talk includes discussing significant changes or impacts that happened the previous month.
Our plan for the coming month, which includes talks of events we’re going to large purchases we need to make for the house.
Outside of the budget, we also have money talks that look at the wider picture.
We discuss our financial progression by calculating our net worth and looking at our current investments.
These discussions can happen every quarter or half-yearly.
Key Tips:
- Schedule your money talks frequently and regularly and respect them
- Don’t be afraid to have a spur of the moment chat about money as you feel it
- In the early days, it may seem like a long discussion but over time it becomes better as you both become more aligned
Take Action
Financial planning as newlyweds requires a serious investment of time and energy, but for the sake of your marriage, it’s worth it!
Make it a point to take these actions from the moment you’ve read this!
Save this post and refer to it often.
Share this with your partner and see what they think.
Check out our Ultimate Money Plan to get in control of your money and smash your financial goals.
Let us know how you’re getting along by getting in touch with us, we’d love to hear from you.
Knowledge is powerless without action
So take action, and take care
Thando