Last updated on November 9th, 2016
1. Decide how to set up your accounts
There are the following options: 1. all joint accounts, 2. a combination of joint and separate accounts, or 3. entirely separate accounts. Most newly weds go with one of the first two; those marrying later in life or previously divorced couples are likely to pick the third option. It makes sense to have separate accounts if one of the spouses has bad credit history so that the other stays unaffected by it. If you have remarkably different spending habits and personalities, the second option could help avoid any fights over spending.
2. Make a financial plan
It is crucial to review your financial goals as a couple, create a budget, and agree on a direction to take based on your priorities as a couple. First step is to figure out financial goals to make sure that both parties are on the same page. Once you have the bigger vision in place, it is easier to create a savings plan and to set a budget for achieving those goals. Make sure to discuss the details, such as setting a minimum threshold cost for discussing big expenses. Have you talked about how you are going to deal with family or friends in need of money? It also makes sense to have a designated bill payer and set up weekly or bi-weekly money meetings to discuss the finances.
3. Update or re-evaluate your insurance policies
If you have an insurance policy, make sure to update the beneficiaries to include your spouse. If you do not have a life insurance policy, consider a term policy if you are going to commit to new expenses like a mortgage. Look at your auto insurance to update it with your spouse and review your homeowner’s insurance with your broker.
4. Invest in your retirement
Consider investing in your company-sponsored retirement plan. You can save up to $25,000 per year and many employers offer a matching contribution. This is free money and you should obviously take advantage of it. If you are self-employed, talk to your accountant about the best option suitable for you in terms of retirement savings and tax filing.
5. Pay off your loans
Make it a priority to pay off your student loans and other debts first to have more money for other needs and investments. However, do it after you have created an emergency fund first. If you have an emergency fund, it will not have to borrow more money should an big emergency expense come up.
6. Create a budget
Add up your essential costs by categories. To be more precise, track your spending for at least a month with the help of such app as Mint. It is recommended that you save 20% of your take-home pay, or up to 30% if you have debt. If you’re spending more than 80% of your income, cut it for your own benefit by eliminating rarely used expenses like cable or gym membership, dine out less, and downgrade your cell phone package. Then, put your next raise or bonus towards savings. Make sure you don’t accumulate more debt.