How To Manage Money After You’re Married
How to Manage Money after Marriage
When you say “for better or for worse” you never envision that the “for worse” could mean financial woes. If you have debt, it is best to clear it up before marriage. Learning how to manage money will prevent you both from repeating the same past financial mistakes and will also ensure that you are both on the same spending and saving page.
Great communication and great financial planning are important pieces that can help to ensure a long and happy marriage. Money problems are one of the biggest stresses in any marriage. Learning how to manage money as a couple, setting solid goals, and sticking to these goals provides a great foundation for a new or existing marriage.
Here are some important tips in working out your financial goals with your spouse.
Compare your assets, your debts, and your net worth. Work together to get all the income and debts organized. Get together paychecks and other sources of income, tax deductions, savings, and other investments accounts. Compare all your debts to your income.
The income that will not go towards paying monthly debt, should be divided up between spending, saving, emergency saving funds, and other investments. The term financial security means that you can weather any financial hardship with ease. Your emergency saving fund should be able to allow you to completely live off of this fund for 6-12 months.
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With the list created of your income and debt, see where you can cut expenses to either pay down debts or put more into savings. It is important to set short term and long term goals so that your financial picture can change with your circumstances.
Projection is an important aspect of learning how to manage your money. Sit down with your spouse and project where you would like your finances to be one year and five years down the road.
Retirement is something you should plan for whether you are young or old. The earlier you and your spouse begin to save for retirement, the more your retirement fund can grow and the more security you will have later on. One of the biggest mistakes people make when they leave a workplace is to cash out their retirement fund. You are now taxed on the withdrawn amount and are slapped with an additional 10% penalty for early withdrawal.
One final word on credit with how to manage money, keep your credit clean. If you have joint accounts, both you and your spouse’s credit will be affected for better or for worse. Your credit score is one of the most powerful money saving tools that you have. Having a good rating allows you to have low interest rates when financing or applying for a loan. Your credit score will similarly affect your ability to get good car and homeowners insurance rates.
In learning how to manage money, you will learn to save as much as possible. This will put you on a fast track to living without debt.