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Money Management Steps for Newlyweds

Introduction

Managing your own finances is already a rather difficult task, and then taking into account the finances of your spouse as well, may at times be overwhelming. However, it’s something that has to be done to ensure a bright future for you as a couple and as a family.


Managing your own finances is already a rather difficult task, and then taking into account the finances of your spouse as well, may at times be overwhelming. However, it’s something that has to be done to ensure a bright future for you as a couple and as a family.

Different couples manage their finances differently. Some stick to their own individual ways, but this may not be compatible with how the other half manages things. Then there are those who try to take on all the financial responsibilities for both people, but the heavy burden is psychologically unhealthy and may probably affect the relationship in the long run. On the other side of the spectrum are the ones who completely wash their hands clean of the couple’s finances, thinking that it’s the other person’s responsibility. These two extremes should be avoided at all times, even if one spouse is a stay-at-home parent with no income.

However, if your financial management as a couple is done right, it can actually be a rewarding way to bond and strengthen the relationship. That being said, money management is no simple task, so don’t expect to get it perfect immediately. Take your time to work out a good system that works for the both of you.
 

1. Talk about your finances

It would be best if you both had started this before tying the knot, but if you haven’t, then now is the time. Both husband and wife should know what type of accounts they each have, as well as how much debt they have. You should also discuss how you expect your money to be handled. For example, you may request that there needs to be a discussion before proceeding with any purchase of more than RM300. At the end of the whole talk, both sides should be clear on where you stand financially as a couple.

2. Write down your goals

Having determined your financial status, the next step would be to have a thorough discussion about your long-term financial goals. This includes setting a retirement age, giving a timeframe to get out of your debts and perhaps aiming to become a single-income family once you have kids, so that one spouse can fully focus on their upbringing. You should review these goals from time to time, to monitor if you’re heading towards them or straying further away from them.

3. Design a budget

First, review your joint expenses over the past few months or even over the past year. Then, decide on how much of your expenses need to be reduced. Next would be to put a limit for the amount you’re allowed to spend according to categories, like food, eating out and entertainment. Don’t forget to allocate for unexpected or irregular expenses such as your car maintenance or doctor’s appointment. A good budget can also help ensure you avoid adding on new debts. However, your budget is also a work in progress, so it’s okay to make some adjustments to it, especially at the early stages.

4. Track your budget

Use a mobile app or create your own spreadsheet to record your expenses, so that you can monitor how it tallies with your budget. Make sure you’re sticking to your budget, and if you’re not, then make some changes to the way you’re spending. You may also be changing your budget itself when there are changes to your situation, mainly in terms of income.

5. Manage your bank accounts

Discuss with your spouse whether to have a joint account or separate accounts or both. Find out which would be most comfortable and beneficial for the both of you. A joint account would be a good choice for single-income families, since the non-working spouse has to focus on the household instead of making his or her own money. As for separate accounts, they would provide some form of independence if you need that. It is also to safeguard yourself, in the unlikely scenario that the other half decides to walk away from the marriage with all the money.

6. Have weekly money meetings

Take some time to sit down together and discuss your financial situation for the week, including how well you’re sticking to your budget, what bills are due to be paid and how you’re progressing towards achieving your goals. Besides just helping you stay on track, these sit-downs will also actually strengthen the communication and trust between the two of you. The meetings will help reduce any anxiety you have about your finances as well.

7. Get out of debt and stay out of debt

It’s best that you try to clear all your debts as early as you can. Have a discussion and brainstorm to find the best way to settle all your debts early. After that, you’ve got to try to make sure you don’t create new debts.

8. Build an emergency fund

This should be your top priority because it can help you out of very difficult situations. You should set aside about 6 months worth of household expenses, to be used in case of major unforeseen circumstances. This could be losing a job, or someone falling ill, or being victim to a natural disaster or having massive home repairs. This fund will not only protect you financially, it will also protect your relationship by preventing arguments sparked by the stress of coping with what’s happening.

9. Save for retirement

If possible, opt for the maximum amount of contribution you can make to your retirement fund. However, if at the moment you are unable to do that, it’s still alright as long as you start immediately. This is because the period of time is just as important as the amount of money, when it comes to growing a retirement fund, thanks to compounding interests.

Moving on to the next stage in your life can be very exciting but, always remember to sit down with your spouse or would-be to have a check and balance on your financial status and how you both could manage the finance together.

Posted by admin on 10 April 2018

Filed under: #Married