Marriage (unfortunately) is not simply an “I Do” followed by an automatic “happily ever after.” It’s a journey. And like it or not, finances play a significant role in that journey. Your saving habits, spending tendencies, accumulated debt, and monthly income all greatly impact your partner and the life you share together.
Most couples probably don’t think about financial responsibility and budgeting with enthusiasm or excitement. After all, it takes time to do and makes you thoroughly examine your behaviors with money (both the good and the bad). It could also be cause for some unpleasant surprises.
But when it comes to finances, I can’t stress enough how critical it is to know how much money you both have and where it’s all going. It can be very easy to lose track of the money disappearing in a flurry of bill payments, impulse spending, hidden purchases, monthly household expenses, you name it. And now that you’re officially becoming a duo, it’s harder to avoid the impact and control that money has on your life.
There’s a lot of information here, so to make it a little easier the steps have been split into two posts. (Psst, be on the lookout for part two next week).
So without further ado, here are the first three steps to get you moving towards financial wedded bliss!
DISCUSS, EVALUATE, DISCUSS SOME MORE
Finances can bring up a wide range of emotion. Examining your relationship with money feels very personal. After all it’s a direct reflection of your habits and highlights your spending and saving personality. Sharing this aspect of your life with another person can be scary or perhaps even a bit embarrassing. But now is the time to lay it all out there and be brutally honest – with yourself and your future spouse.
You don’t need to write down any numbers yet. This stage is meant to get the dialogue started. What are your financial similarities and differences? Are you a spendthrift while your significant other splurges? What are your money fears for both the present and the future? Are either of you still paying off student loans or trying to get out of credit card debt?
Here is your chance to voice concerns, but it is not the time to be confrontational or point fingers. Your current financial situation may not be as ideal as either of you would like. Yes you must recognize and acknowledge the past (after all it’s why you are where you are), but don’t look at it as anyone’s fault.
The end goal is to find a way to move forward as a couple. Open communication and honesty without fear of being judged is the foundation to building a solid financial future together.
CREATE A BUDGET
I’m not talking about the wedding budget. Yes, you absolutely need one of those as well, but this is about how to create a monthly budget for your life as a couple.
A budget essentially summarizes your financial situation and allows you to make smart choices going forward. By creating and tracking a budget, you are able to find patterns in your spending and saving. Budgeting also sets the groundwork for your financial goals.
This process makes you look long and hard at where you can eliminate costs as well as forces you to examine your priorities. It allows you to determine how to spend, plan for the future, pay off existing debt and where to save by removing unnecessary and wasteful purchases.
It’s an essential step in gaining control over money. It can give you focus and teach you to curb overspending. While it may seem challenging at first and requires a lot of self-discipline as well as teamwork, it’s doable and manageable.
Simply put, think of budgeting as your roadmap to saving money and getting (or staying) out of debt. You need to monitor the money coming in versus the money going out.
Take a look at the following categories and write down the numbers. It can be very tempting to fudge, but remind each other that there’s no point in creating a budget if it doesn’t reflect the real situation.
THE CATEGORIES:
What You Each Make / Total Earnings
What You Each Have/ Total Savings
What You Each Owe/ Total Debt
What You Each Spend/ Total Spending
Next create a list of your monthly expenses. Everything. All of it. Anything from the rent, to your gym membership and their latte habit, goes on the list. You’ll figure out what to adjust or remove later, but for now focus on being thorough.
Don’t be hard on yourself or one other for what you spend money on. Some of these expenses may be good, others maybe not. Oh well. Now is the time to commit to making changes.
It’s better to be completely aware of your situation than blindly charging your credit card for whatever comes your way.
SET GOALS
Goal setting goes hand in hand with effective budgeting and building momentum towards financial wedding bliss. Addressing your goals now, not only gets you excited for the following steps, but it also helps you to remain focused.
Let’s be honest, sticking to a budget is not always fun and can be a challenge in itself (especially if you find that some lifestyle changes or adjustments are needed). But your goals will serve as a reminder of why you decided to take control of your financial situation. They’re the fun reasons that keep you on target for saving.
Keep in mind that you and your partner may have different goals. Despite how in synch you feel, you need to have a discussion specifically about what you want for your financial future. Chat about your wants and desires for the short term, the long term, savings and retirement.
Be sure to make realistic goals. Setting the bar too high or deadline too soon may leave you both feeling discouraged. Just as vowing to commit to something drastically different from what you’re used to, may not be sustainable. Goals are super important – but slow and steady wins the race!
Now is also a good time to discuss your wedding wants, needs, and budget. If you’ve already done this, take the time to recap what was talked about. It’s possible your interests or desires for the big day have changed. Say you and your significant other want to buy a house within a year, maybe you don’t want to (or can’t) splurge on an all-night open bar, or that five tiered wedding cake.
We’ll get more into prioritizing later, but for now consider which goals stand out as being the most important to you both. You may be surprised with what you find.
CONGRATS
You’ve made it through part one! No, we’re not done, but you should take a break and pat yourself on the back. Opening up a dialogue and laying the financial groundwork with your partner is not always an easy task, but you did it!
Stay tuned for next week when we tackle the remaining steps for achieving financial wedded bliss!
How are you feeling? Comment below!