In your first few months of married bliss, you've probably experienced some challenges over finances. According to a study from Ramsey Solutions, money fights are the second leading cause of divorce.1
Don't let finances get in the way of your happiness. The time to be proactive about creating a budget and saving is now. Here are five common money mistakes that can allow those early spats to add up to major financial woes, and tips on what you can do to get started down the right path.
Not being completely transparent
Before you tie the knot, be honest about your financial history with your soon-to-be spouse. Credit card debt, college debt, car loans, any lawsuits or liens - it all needs to be on the table. Don't assume that by entering into a marriage and having a double-income household will make paying off your personal debt twice as easy.
Things can get more complicated the second time around - when you and your fiancé have established households, families and financial plans. To blend your households while still protecting your separate lives, open, honest financial discussions are critical. Combining your finances can also be tricky since you both are used to managing things on your own. Do you want to combine your money or would you prefer some independence?
Not creating a budget
Don't wait until money becomes an issue to create a budget. Review your spending habits from the last several months. Then draw up two charts - a chart that reflects what you actually spend each month on rent or mortgage payments, food, utilities, credit card payments, entertainment, etc., as well as how much you put into savings, and another, more aspirational chart, that reflects how you'd like to alter your spending and saving patterns going forward.
Failing to prepare for the future
You may have discussed your long-term goals and dreams for the future early on in your relationship, but now that you're happily wed, it's time to have that discussion again. How much will you need in retirement savings in order to maintain your vision for the future? How much of that already comes out of your paychecks, and how much will you be responsible for squirreling away on your own? Do you plan to have children or assume responsibility for an elderly parent if necessary? How might that affect your own retirement goals? It's important to discuss such issues at length and develop financial strategies for all possible outcomes.
Also, while nobody wants to contemplate worst-case scenarios during the honeymoon phase, getting a life insurance policy for one or both partners could bring serious peace of mind to your union. If you're unsure how much life insurance you might need, try taking a DNA (Detailed Needs Analysis) test.
Not sharing the burden of financial planning
Maybe one of you is better than the other at budgeting and remembering to pay bills on time. But setting up a plan with one partner paying the bills and crunching the numbers and the other simply spending the money probably won't be healthy in the long term. It's important that both of you remain keenly aware of where your money is going and that both of you participate in the banal, monthly tasks that help you secure and maintain financial stability.
Enabling bad spending habits
Of course, all your best-laid budgeting plans are for naught if neither of you can follow through. Talk honestly about your spending/saving strengths and weaknesses, and try to stay level-headed. For example, are you spending too much in one area and not enough in another? Is taking a dream vacation without planning and saving going to zero out your savings account? Discuss what you can reasonably afford to spend on extra purchases such as new clothes, electronics, or vacations, and set hard limits if necessary.
As newlyweds, you have enough adjustments to make. Get started on the right path by talking about what your expectations are for each other in terms of sharing paychecks, merging bank accounts, paying bills, balancing bank statements, etc. Read more about financial tips for newlyweds with Protective'sMarriage Checklist.