The commitment of marriage is one of the most important decisions people make in their lives. It’s a union between two individuals who share an everlasting love for each other.
If you’ve already tied the knot with your partner or at least plan to, you probably know quite well that it’s a team sport. You and your spouse, as a couple, share the same responsibilities. That includes managing your finances together.
Many marriages have gone sour due to arguments about money. You see, managing your finances alone is very different from doing it as a couple. When you get married, your spouse always has to be part of the equation. You can’t leave them out of your goals or plans. You can’t keep secrets from them about money and expenses. That’s why trust is key in a happy and long-lasting marriage.
Trust alone, however, won’t bridge the gap between you and your financial goals. But it greatly helps in making sure that you go through the step-by-step process of preparing for marriage as husband and wife.
Setting Up Your Goals
The first thing you and your partner have to do is to come up with a sound financial plan. How? Well, start by asking yourself and your spouse what you want in the future. Do you want kids? How many of them do you want? Do you plan to buy a house? What type of house will it be? These are just some of the examples of how you can set up your goals, which will serve as a guide of sorts for your financial plan.
When looking at your goals, it’s crucial that you also have a timeframe for them. For instance, do you want a baby right away or will you save up for a house first? These are decisions that you have to make as a couple, so that you can prioritize which goal you’ll try to hit first. You don’t necessarily have to limit yourself to tackling one goal at a time. You can try to save for a house and a baby simultaneously, deciding what percentage of your paychecks goes to what savings. But, again, prioritizing saves you from being overwhelmed by expenses.
Then, you have to determine your economic value. It’s essentially how much you and your spouse make per month. Note that your value doesn’t include what you already had prior to marriage.
After that, create a solid foundation to protect that value. It’s good to start with a life insurance policy to safeguard the financial stability of any dependents you have or might have in the future. You probably should also consider disability and critical illness plans to mitigate the risks of unforeseen emergencies.
Remember, whether you’re in a dual-income or single-income household, each spouse should be protected with his or her own policy.
As to the amount of the coverage you have to purchase, it’s advisable to do some computations based on your own budget and personal needs. There’s no general rule-of-thumb for this. It will be different for every couple. What’s important is that you can afford to pay the premiums and maintain the coverage.
Executing Your Plan
Now that you have a financial plan, the next step is to work backwards and find out how much money you’ll need to save regularly to achieve your goals. You can do computations and assume how much your take is from your income generating assets and jobs at a given period and go from there.
While you and your spouse can do this without any help, you might still be better off getting in touch with a financial advisor, who may be able to fine-tune your plan and point you to the best investment options available. If you choose to go with this route, be sure to open up to your advisor, so that he or she can understand your needs better.
Keep in mind that when you’re targeting an amount to save for in the next 10 years, for example, you have to factor in inflation. That should be a given as there’s just no getting around how the value of money inflates in time. So you have to know how much something costs today and how much it can possibly cost in the time that you plan to spend for it.
Executing your plan mostly involves sticking to it for the long-term. Unless you’re making a boatload of money, it’s impossible to reach your goals overnight. As such, it’s vital that you and your spouse are disciplined in taking control of your finances and seeing your plan to fruition every step of the way.
Reviewing With Your Financial Advisor
Last but definitely not the least, you have to keep track of your progress by revisiting and reviewing your plan with your advisor regularly at least once every two years. This will help you adjust to new changes that come up in your lives such as having a baby or finding a new job.
Don’t be afraid to sit down and talk about this as a couple as well. If you feel you have to review what you’ve started planning for, then definitely do so. Always remember that things can change; priorities can change; even people can change.
Manage your expectations too. All your decisions should be influenced by whether you can afford it or not. If you eventually plan to grow the family down the line, why not start saving for it today. As with most financial endeavors, being one step ahead makes it easier for you to reach your desired destination in life.
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