Mistakes will always be a part of life and when you are dealing with your finances, money mistakes will happen. This is tougher when you need to get through it in the early stages of your marriage although money problems in marriage are common enough and there are ways to get around it and not let it affect your relationship with your spouse.
According to CDC.gov,the marriage rate in the country is at 6.8 for every 1,000 in our population. And with the newest ruling coming out of the US Supreme Court allowing gay marriages, a lot more people will plunge into taking their relationship to the next level. But it will not always be a bed of roses because after some time, life creeps up and brings you back to reality.
Money mistakes are not at all too uncommon but what separates one couple from another is how they deal with the problem. One thing that helps to address the financial problems is preparing for them and having an idea what these potential bumps in the road are. It is not a guessing game because there are other people who has already gone through those stages and it is just a matter of learning from them.
A lot of people say that getting married is one of the best things that can happen to two people. You get to spend a lifetime with another person that loves you and believes in your dreams. But at some point, the both of you will have to face problems including those that will directly affect your finances. You need to work together to face these problems head on.
Financial mistakes by newly married couples
If you recently got married, here are few things that you might want to look into to help you prepare for those money problems you might face. Knowing the possible challenges will help but it should not end there. You need to understand the issue thoroughly and work with your spouse to get through them.
- Not talking about money. Choosing to ignore the problem will only make matters worse and if you are having problems with your finances and ignore it, it will only get bigger and bigger. One of the first things you need to accomplish as a couple is to put together your household budget as a couple. Investopedia.com explains that a budget is simply the income and expense matched over a period of time but do not let the simplicity of this financial tool fool you. For one thing, a lot of people including couples decide to look over and forget about a budget because of a number of reasons. One is that it takes time to do and another is that it forces them to face their money situation. You need to put together your budget as a couple so you know how you can both manage your finances.
- Not addressing different views about money. You and your partner will come from different family background and as such, you might have different views on how to handle money. It is possible that one of you is a spender and the other is a saver or that you have different views when it comes to retirement and investments. You need to remember that these are not grounds to separate or to constantly fight about money. But you both need to sit down and put some boundaries and work around and agree on how you will spend and manage your finances.
- Keeping money matters to themselves. You might have the tendency to hide debt and credit issues from your partner because you got used to dealing with them on your own. But when you get married, it is imperative that you talk about money and not hide anything from your spouse. You run the risk of exposing them to unnecessary financial risk.
- Putting most of the money in the house. If you are just starting out, it is tempting to get a house with a mortgage loan. You might be dreaming of a big house with a big backyard so your future kids can run around and play. This is all a good plan but the only time this becomes one of the most common money mistakes of young married couples is that you might park ost of your income in a house and not leave much for anything else. You need to weigh your housing options whether getting a mortgage is better than renting or if that mortgage amount is just enough that you can still manage your other financial needs.
- Not preparing for worst-case scenarios. These refers to your family’s reserve funds covering your emergency fund and your rainy day fund. You need to prioritize your reserves because this will help you get through some of life’s unexpected twists and turns that will impact your finances. If you suddenly lose your job, you need to look for another one but if it takes you anywhere between three to six months before getting a steady pay, it means that you do not have income to cover all your expenses for those month. This is where your reserves come in to help and cover those months where your income is affected.
Best financial moves to focus on
Apart from trying to understand some of the potential money mistakes that young married couples make, it will also help to know what to focus on financially. Here are some of the funds that you need to seriously look into when you are just starting up on your own or when you get married.
- Put together a household budget. There is big difference between being frugal and cheap and you need to find that balance when you start putting together your household budget. You need to remember that your budget will be one of the pillars of your finances and will either help you get closer to your goals or pull you further away.
- Plan your long-term goals. Apart from living day to day, you need to discuss with your partner what your long-term goals are. It could be children in a few years, getting a house of your own or even setting up that home business that you have both been looking at. The important thing is that you set your sights on your goals and work your budget around reaching those dreams.
- Look at establishing a college fund. There are a lot of ways to save for a college fund like a 529 plan which is a tax-advantaged savings plan for families. The important thing is to look for one that you are most comfortable with and start saving early for your kids. You do not want them to be burdened with massive student loan debts that can hinder their progress in life.
- Plan to retire early. When you and your spouse plan to retire early, you get to be more aware of your spending. It might just be one of your long-term goals but this gives you the opportunity to retire at an age that you want not at the age that you need to. Statisticbrain.com shares that average retirement age is lready at 63 years old but wouldn’t you want to retire early and start living life? Besides, if you plan for early retirement and you encounter some financial problems along the way, at least you already started and that compound interest is working on your favor.
Money mistakes is common even with newlywed couples. The idea is to try and anticipate these problems by looking at the most common mistakes people make and work around those challenging areas.