This year has turned many plans upside down, and wedding plans were no exception. If you have a wedding planned for the next few months, or if your wedding has been postponed due to the COVID-19 pandemic, now is a great time to sit down and plan your financial future together.
Finances are one of the main points of contention for many married couples. When partners disagree about spending habits, how much to save, and how to pay off debt, it can lead to stress, arguments and resentment.
It’s easier to stay on the same page when you clearly know what your goals are. Do you want to save for a down payment on a house? You might like to pay off those student loans. Whatever your financial goals are, make sure they’re clear, realistic, and achievable.
Describe exactly what the goal is and set a deadline by which you want to achieve it. Be open and honest about your goals, and remember that you are both on the same team and trying to reach the destination together. Of course, unforeseen expenses can arise, so you can adjust these goals as needed. Remember to check your goals at least once a year (or preferably more often) to make sure you’re always on track.
When finances are tight, it’s hard to project into the future, but it’s still a vital part of your financial plan as a couple. It is important to consider all of your benefits of the job. Is it cheaper for your spouse to be covered by your employer’s health insurance plan? Are you using all the benefits offered? This is an area that many couples overlook when trying to save money.
Next, think about the legal documentation. If you don’t have a will in place, it may be time to hire a lawyer to help you. If you have a will, does it need to be updated for your spouse to be your beneficiary? The other documents in your estate plan include trusts and powers of attorney, so make sure everything is covered.
Another aspect of planning for the future is putting money aside in an emergency fund. Experts generally suggest setting aside between three and six months of expenses in an easily accessible form (for example, a savings account or money market account), so if you suddenly lose your job, you don’t hurry. to pay your bills. Emergency funds can also be used to pay for unforeseen medical care, broken devices, or unscheduled car repairs. It’s impossible to predict the future, so having a financial backup plan can really help you stay prepared.
One of the best things you can do to keep your financial plan on track is budgeting as a couple. When you were single your spending was only about you, but now what you spend affects both of you. First, think about how much you need to cover your basic expenses. This includes rent or mortgage, energy bills, food, internet and telephone bills, and minimum loan payments. Then put some money aside for short and long term savings. You can save for big purchases, like a vacation, a car, or a house, or for smaller purchases, like a new game console. And don’t forget about retirement! If your job doesn’t have a 401 (k) program and you haven’t started saving yet, it’s important to set aside a percentage of your income in an IRA (Individual Retirement Account).
A good place to start with a budget is the 20/30/50 rule, where 50% of your income goes to needs, 30% of your income goes to wants, and 20% of your budget goes to long-term savings. This way, discretionary spending is built into your budget, so you don’t have to feel guilty about spending money on a date or a new pair of shoes. Once your budget is determined, track all the money you spend to see if there are areas where you can reduce discretionary spending. While a cup of coffee or a to-go lunch is a treat, it can quickly add up if you indulge yourself every day. These daily expenses may not seem like much, but when you track the expenses with your budget, it’s easier to see exactly what you’re spending money on and which expenses can be eliminated.
Keep in mind that married couples enjoy certain tax benefits, such as the ability to file a joint tax return. Joint filers enjoy one of the largest standard deductions each year and are generally eligible for multiple tax credits. Talk to a CPA to find out how to take advantage of it. Also, consider whether you want to tie up your finances completely or have both joint and separate accounts. Not all couples are completely comfortable sharing common finances, so it is only normal to have separate accounts for discretionary spending and a common account for family expenses.
Developing a financial plan for your future is an important first step towards a financially healthy future. And if 2020 has taught us anything, it’s to always prepare for the unexpected with a solid emergency fund and a realistic budget.