|
Getting your Trinity Audio player ready...
|
Becoming a married couple can have a significant impact on your financial plan and how you manage money, especially in the long term. It is essential to review the pros and cons, or financial ramifications that occur when it comes to managing your money as a couple.
This blog provides you with a general housekeeping checklist for a range of important areas.
Insurance
- Adding your spouse to your insurance policy – Make sure to check if you can add your spouse to your existing policy (e.g., health, car insurance), as this can provide them with coverage and could well result in lower premiums than two separate policies!
- New policies – You may need to purchase new insurance policies to ensure you are both covered, so make sure to contact your current policy provider to evaluate your options.
- Changing your beneficiary designations – Review and update your beneficiary designations on policies to ensure your spouse is included.
- Review your coverage – Ensure you have sufficient protection and that your coverage meets your requirements as a couple, especially if you have children or a mortgage.
Bank accounts
Once married, it is a good idea to open 4 separate bank accounts:
- Joint bank account – In this account, you should account for all shared expenses, such as credit cards and household bills. You should both pay in and manage money jointly in this account.
- Savings account – Here, you should both agree to pay in a percentage of your income (relative to income). This is crucial when ensuring long-term stability and should be started as soon as possible in order to secure a comfortable retirement!
- Two separate bank accounts – It is highly advised that each partner has their own financial independence. Each partner should have their own spending money to adhere to their own spending habits in order to maintain a healthy, balanced relationship. You have a joint account to split the bills!
Communication
Some other things to consider when combining your finances:
- Communication – It is very important that you have open and honest communication about both your individual and collective financial goals/priorities. In order to make it as profitable as possible, full transparency is advised when considering ideas or potential depts to prevent future conflicts and build trust.
- Make a plan and prioritise spending! – Incomes in marriages can vary between partners, so it is essential that you set out a joint plan that includes how bills will be split, how much each will pay into savings, and how much can be left to personal spending. Also, consider each partner’s priorities (e.g., saving for a down payment on a house etc) to maximise saving efficiency.
- Set boundaries and establish a budget – Make sure each partner understands the other’s financial habits and tendencies so you can work together and create a budget that ensures one partner doesn’t spend too much proportionately, as this is a common cause of conflict between couples.
Other Ways to Manage Money Effectively
- Review and update your financial plans – With inflation spiralling, the financial landscape is very volatile, and whilst a recession looms over much of the world economy, opportunities in fintech and other financial sectors offer great promise for the future. Therefore, it is crucial that you reassess your investment and spending strategy as a unit to not only minimise and mitigate your expenses but identify new opportunities.
- Keeping track of financial documents and important information – Make sure you have a safe and secure place to store valuable information such as insurance policies, bills, investment statements, and taxes.
- Capitalise on unity – Many people don’t realise the full benefits of pulling their finances together. Some key benefits include Reduced expenses (one set of bills, shopping etc), Increased buying power (combined income), greater flexibility (increased safety net), economies of scale (e.g., cheaper insurance through combined policy), better credit score (combining credit history to get loans and credit cards), and retirement planning (two people paying in).
- Seek professional advice – Although this blog will have hopefully provided you with a few good starting points, it is always recommended that you speak to one of our financial advisors or a professional consultant who can help you maximise your financial efficiency and identify the fantastic opportunities ahead.
