Hooray for all the newlyweds! You’ve survived planning a wedding and enjoyed your care-free honeymoon, and are now ready to live a blissful life together. But before you submerge yourself in a happily-ever-after fairy tale, there a few things that need to be in order. For starters, you and your spouse need to say hello to the elephant in the room: money.
Most newlywed couples tread lightly when it comes to this discussion. And they have reason to do so: money is the number one cause of arguments between married couples. But that doesn’t mean it needs to be. In fact, having an open and honest dialogue about finances can strengthen your relationship.
Forbes recommends 13 tips for getting your newlywed finances started on the right foot:
- Talk about your financial goals, memories, and habits. This should help you both further understand one another’s point of view and approach to finances.
- Take a look at the numbers. Consider the money for 3 things: emergency funds (3-6 months of essential bills) one-to-five year goals (down payment or vacation), and long-term goals (child’s education or retirement). For life goals, have an honest and realistic discussion about what you want from your life together and what you can afford.
- Set financial goals. Your financial goals are emergencies/retirement. What are your financial priorities? Depending on your situation, a certified financial planner can help you.
- Create a budget. Consider essential costs and discretionary spending. If you’re unsure how much you spend in each category, track your spending for at least a month. Forbes recommends saving 20% of your take-home pay—10% towards emergencies and 10% toward retirement.
- Decide how to set up your accounts. There are 3 options: all joint accounts, a combination of joint or separate accounts, or entirely separate accounts. If you have largely different spending habits, option 2 could help head off fights in the future over expenses.
- Designate a bill payer and a weekly or biweekly money meeting. One person should be in charge of paying the bills, but the other should always be aware of what’s happening. Meeting regularly will keep you both on the same page and foster discussion.
- Set a minimum threshold cost for discussing big expenses. Agree to always discuss purchases over a certain amount. For example, any expense over $1,000 should be talked about together.
- Talk about how you’ll deal with friends and family in need of money. Sit down and agree upon a policy for these types of situations. Whatever the situation, this needs to be evaluated by you both so that there is no confusion or anger.
- Call your accountant. Talk to a professional and decide whether it makes sense for you to file taxes jointly or separately.
- Update all your beneficiaries. Most likely, you’ll want to update your list of beneficiaries to include your spouse. A beneficiary is the person who will receive the benefits of a will, trust, life insurance policy or other financial accounts
- Give your spouse power of attorney, and designate him/her a health care proxy. By giving your spouse power of attorney, they can make legal decisions about your property and finances. When you name your spouse health care proxy, discuss what you would like to have happen should you become incapacitated.
- Create/update your will to include your spouse. If you don’t have a will, the state will make decisions for you. Its especially important to have a will if you have children.
- Update or reevaluate all your insurance policies. See whether it makes sense for you to be on the same health insurance plan, and if so, which plan gives the best coverage best for your situation and for the cost. For auto insurance, be sure to put your spouse on your vehicle, and meet with a broker to review your homeowner’s insurance.
To read the full article, visit www.forbes.com/sites/laurashin/2013/08/14/newlyweds-heres-how-to-manage-your-finances.