5 Ways Newlyweds Screw Up Money Management
My fiance and I are in the waning days of what seems like the longest engagement in relationship history.
Considering that we're paying for our own wedding, my fiance and I have talked a lot about finances the last two years. In fact, looking back on the process, that constant communication is actually one of the best things to come from footing the bill ourselves. We've had no choice but to make tough choices and talk honestly about where we were, where we are, and where we're heading financially.
Turns out not every couple is so lucky. Academics might always debate whether money is really the leading driver of divorces, but there's no doubt it plays a part, if not a starring role, in many separations and splits each year.
I'm still pulling for the fairytale ending, but to be sure, I started poking around into some of the common mistakes newlyweds make when it comes to money. Here's a look at five of the big ones. (See also: How to Be Happy and Married: 24 Tips From a 24-Year-Old Marriage)
1. Not Talking Money With Your Spouse
Avoiding the topic altogether is a sure fire way to fail in post-nuptial finances. Discuss your financial goals, burdens, and budget ideas well before you head down the aisle, or if not, as soon as possible post-honeymoon. If you’re coming into the marriage with a lot of debt, whether from student loans or credit cards, you at least need to be upfront about it with your partner. This applies before and during the marriage as new issues emerge.
2. Giving One Person All the Power
When you have to decide who will physically pay the bills, file the taxes, watch your investments and accounts, and make sure you stay on budget, it’s wise to not put all these eggs in one partner’s basket. While one person can take primary responsibility for such tasks, the other spouse should always maintain involvement and awareness when it comes to money matters. In case something happens to you or your spouse, you should both be aware of your account information, passwords, bill due dates, and any other necessary financial information.
3. Not Creating a Budget or Joint Financial Plan
It’s not easy to merge two incomes, spending habits, and saving habits into one household, so it’s essential to draft a basic budget plan early in your marriage — or even before if possible. Start with a basic budget worksheet, in which you detail your income; essential expenses such as rent or a house payment, food, and insurance; and flexible expenses. Track your spending as a couple for several months and revisit the budget, tweaking if necessary to make sure it works in practice
4. Fighting Over Small Money Matters
Picking your battles can be one of the toughest things to do in any relationship, but when it comes to money in a new marriage, it is critical to keep you both sane and from going broke. There will be plenty of ironing out to do as you merge your pocketbooks, but arguing with your spouse because they spent 50 cents extra on a box of brand-name popsicles won’t make the process easy for either of you.
5. Not Preparing for Emergencies
There’s no way you can mentally, physically, and fiscally prepare for every possible scenario to confront you as a married couple, but saving some dollars for a rainy day is always helpful. This may be hard to do as you’re paying off a wedding or any other pre-marriage debt you may have; but starting small and then building up as you can, making sure saving is a routine part of your marriage will be incredibly helpful in the long term.
This list is by no means exhaustive, so please feel free to share your advice and experience below.