Wedding season is officially under way, and odds are, couples en route to the altar have been fiscally focused almost entirely on the Big Day for quite some time.
But once you’ve said your I dos, financially (not romantically), the honeymoon’s over. It’s time to shift some of that energy from planning your marriage to successfully living as a legally wed duo, and that includes figuring out how you’ll handle your money. After all, marriage is an economic partnership too, and disagreements over money are the top source of conflict among couples.
To increase your odds of attaining (and sustaining) marital bliss, implement these five pieces of financial wisdom.
1. Draft Your Marital Money Rules.
Financial goals and household budgets are very important, but equally so are your marital money rules. Think of this as a contract between you and your spouse regarding how you will work together financially. Determine how you’ll handle the bill-paying and whether or not you’ll keep separate checking and savings accounts. Also, establish guidelines for how much money you can spend without having to “preauthorize,” or check in, with your significant other.
2. Live on One Salary, Bank the Other.
Perhaps you’re both working now, but that may not always be the case. If you decide to have children, go back to school, or start your own business someday, that might involve one of you scaling back or getting out of the workforce altogether. Set yourselves up for those possibilities by living on one salary and saving the other. You’ll have more options if you have enough savings to replace one of your salaries for an extended period without having to dramatically alter your lifestyle.
3. Get Rid of Debts.
Starting a marriage with no debt is ideal, but typically unrealistic. Many couples begin marriages with student loans or credit card liabilities. Devise a plan for reducing your debts. Start by transferring balances from high interest credit cards to one with a lower rate. If you’re not able to transfer your balance, pay off either the card with the highest balance or the highest interest rate first, while paying the minimum on all other cards. Cut expenses to pay down your balances as quickly as possible.
4. Review Your Retirement Plan.
A financial need that’s decades away might seem really abstract right now, but no one else will provide for your retirement except you. And the long-term impact of opening a retirement account now is huge, with compound interest accumulating over decades until you retire. Sock away as much as you can in your retirement plan at work. If you can eke out even more money from your budget, contribute to individual retirement accounts like the Supplementary Retirement Scheme (SRS) provided by the CPF Board.
5. Review Your Insurance.
As newlyweds, you need protection against catastrophic medical expenses and a long-term disability. Your employer likely offers disability insurance coverage up to a certain amount as part of a group plan. But make sure it’s enough to fund your and your spouse’s needs in the event you can’t work for a while. Increment of life insurance can generally be delayed until you have children, at which time you might supplement your coverage with either a term or whole life policy.
Put Marital (and Financial) Happiness at the Top of Your “Honey-Do” List
Just like your romantic partnership, your financial partnership is something you craft together as a couple. Take it seriously, and establish your guidelines early, even when it involves topics you might prefer to dodge. By doing so, you’ll limit future arguments, and your marriage will be better off for it.