That’s why we’re here to help you with a list of common mistakes many newlywed couples make with money, so you and your partner can be prepared for your future.
Mistake #1: Not Talking About Money Before Marriage
Many people don’t like to talk about money: their spending habits, how much debt they have, their credit history, their future plans for savings, and so on. Talking about money can make you feel judged or insecure. However, it’s important to have this talk with your partner before your lives officially join. Money will influence future decisions you make in your relationship, like buying a house or car, taking vacations, career changes, or having kids. If you’re not on the same page with your financial habits and goals, it can cause problems later on.
Because it’s such an important conversation, it can feel daunting, but you and your partner can do it. Set aside some time to talk, and make a list of questions to ask each other. You may find that you have different beliefs or expectations about money from your partner. Remember, that’s perfectly normal. Once you get this first conversation out of the way, you can use what you learned to talk about money further.
Mistake #2: Keeping Secrets from Your Partner
A survey by CESI Debt Solutions found that 80% of married individuals admitted to hiding purchases or keeping quiet about certain spending decisions. If you and your partner have different views on spending, keeping them in the dark is a way to avoid conflict and difficult conversations. It can be a tough habit to break, but be open with each other about your finances. Schedule regular money conversations when it works best for both of you, whether that’s weekly, monthly, or quarterly. If talking about money makes you both nervous or stressed, make it fun: go out for a cup of coffee or a pastry, and hash it out there.
Mistake #3: Not Setting a Short-Term and Long-Term Budget
If you and your partner planned your wedding together, then you’ve already used a budget to tackle that short-term goal. Other short-term goals might include creating an emergency fund, paying off student loans, cutting down credit card debt, or travel.
Long-term goals might include retirement, paying off a mortgage, or saving for your children’s college tuition. Both your immediate budget and your long-term strategy are important. Once you’ve agreed on your goals, create a budget together. Track your spending to give you an idea of where your income is going — you can even use this free budget sheet to help. Be sure that both of you are reviewing and adjusting your budget. Remember that household financial decisions should be made as a team.
Mistake #4: Overspending or Not Saving Enough
As newlyweds, it can be very exciting to make a big purchase together, like a new home or car. Though it’s tempting to use your joined incomes to justify spending more than you planned, remember that a big purchase is a big decision. Buying a house or car that will eat up a lot of your monthly income on payments may hinder your finances (and goals) down the road. If you or your partner wants to start a business, have kids, or go back to school, you’ll need flexibility and cash flow to do that. If you overspend now, your options may be limited.
Similarly, not having a rainy day fund or emergency plan can set you back in the future. It can be tough to think about what would happen in the event that you or your partner became sick or died unexpectedly, especially after you just got married. But preparing for these situations can save you both a lot of stress in case they happen.
Do you and your partner need more guidance on your newly-joined finances? Check out the rest of our Newlywed Conversation series for more tips.