Getting engaged and planning a wedding is exciting as you plan for the future together. Amidst the wedding planning, the elephant lurks about how your future finances will work. Some couples prefer to stay completely independent financially, but others find it easier to merge finances so that bills are paid easily, and spare money is fairly distributed. We take a look at 12 tips to ensure you merge finances smoothly:
Have “The Talk”
The key to any successful relationship is open and honest communication. Regarding finances, it’s important to be upfront when a relationship becomes serious to ensure you’re both on the same page. You should discuss your financial goals, spending habits, debts, and credit scores, as being transparent means no secrets are heading into a marriage. You can discuss whether you will have a joint account or share the bills across both accounts, or you may want a joint account for bills and a separate one for personal finances.
Create a Budget
As boring as it sounds, it is good to create a budget to keep your finances on track. The best place to start is to create a spreadsheet to track your income and expenses to see where your money goes. Once this is done, you can see how much you have to contribute to bills, how much you can put into savings, and what “free” money you have to spend on treats.
Debt Management
If you have debts, discussing a plan to tackle them is important. You could consider debt consolidation or repayment strategies to become debt-free faster. If you work as a team, you can reach your shared financial goals quickly. For example, if one partner has much savings, you can discuss transferring the money to pay off the other partner’s debt and then begin saving together.
Get Saving
Once debts are paid, you can start to consider saving for your future, whether it’s a dream honeymoon, a down payment on a house, or a comfortable retirement. You can explore different savings options, like high-yield savings accounts or retirement plans offered by your employers, and agree on how much each of you will contribute each month.
Create an Emergency Buffer
There will be many ups and downs to navigate as a couple, and there will be times when money is tight. When life throws you a curveball, building an emergency fund to cover unexpected expenses like car repairs or medical bills is a good idea. You should save 3-6 months’ living expenses to create a good comfort level.
Review Benefits
When you get married, you may be entitled to different benefits. You should review your employee benefits together and determine the best options for health insurance, life insurance, and any retirement plans offered by your employers. You might be able to save money by consolidating coverage or taking advantage of employer contributions.
Credit Check-In
Use a credit checking service to see your status and ensure you have the best credit score possible. Once you have your report, you can address errors and work together to get a better score. This is important if you want to take out joint finance together in the future for a mortgage or loan.
Set Financial Goals
Talk about your long-term financial goals, like buying a house or starting a family. Discuss short-term goals, like that dream vacation or a new car. Work together to create a plan to achieve them all.
Regular Discussions
For example, you can schedule date nights or cleaning days, but you should also schedule regular “money dates.” Discussing finances and reviewing your budget regularly is important to keep on track and adjust your plans as needed. This is especially important if one of you has a change in circumstance, whether it be a job promotion or a salary decrease.
Celebrate Milestones
Reaching financial goals, big or small, deserves celebration as it can be hard work. Reward yourselves for your hard work and commitment to your financial future together, and use it as motivation to reach your next goal.
Adapt and Adjust
Life circumstances change, especially if you decide to have a family. This means you should be prepared to adjust your financial plans to reduce the chances of you getting into debt or not saving as much money as you need for the future.
Seek Help When Needed
Don’t be afraid to seek professional financial advice if you are unsure how to merge your finances. You can also speak to friends and family who have navigated joining finances to see what options work best for you.
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