When you get married or move in with your partner, you need to find a dynamic that works well for both of you. And your financial decisions are also a part of this. Let’s see what the most common mistakes young couples make are and how to avoid them.
You might handle your money in a great way, but when you start sharing your life with someone, you need to rebalance this aspect of your life. Merging your finances will have an impact on the way you organize and manage money, so it is important to avoid these mistakes:
Some people find it hard to sit down and talk about money with someone else, but if you don’t do this as a couple, you will find yourselves fighting over money and not being able to plan ahead.
There are a lot of ways of saving money if your earnings aren’t that high. Young couples usually fail to start saving money for future events, such as having a child or buying a house. It is also very important that you and your partner save up for an emergency fund and for retirement. While you are young, you usually don’t think about this. But the sooner you start saving for these two particular items, the better.
Being a homeowner is the American dream, but waiting until you are financially stable is a smart decision. Before you do that, you need to make sure you can afford to pay a mortgage while still manage to build a strong financial ground.
Failing to manage debts and credit cards in a smart way
You need to be honest about your financial situation and your partner should be as well. If you are deeply in debt, you need to communicate this to your partner so you can both work out a plan to pay it off. Even if both spouses have separate credit records, you should both be on the loop about how the situation is.
If you feel like you or your partner are making any of these mistakes, take this opportunity to sit down and discuss the situation. Finding a way of avoiding this will improve your economic situation now and towards the future!
Is marriage also a partnership?
Money issues are one of the main reasons why couples argue. That's why it’s vital to establish good communication since day one about everything related to finances.
When you get married, your life changes in different aspects. Your personal independence stays behind and now you're going to share a home and a family with your significant other. In order to avoid future misunderstandings and uncomfortable situations, it's necessary that both of you have a transparent and honest talk about money.
Firstly, take into consideration that you come from different families, and you may not think alike when it comes to money management. You should respect the other position and be honest about the expectations of your common life. You may have dissimilar income levels, and that's a good reason to discuss how you’re going to organize your financial life together.
You should establish a budget together, and write down all expenses and bills that you'll have to face as a married couple: rent or mortgage, car insurance, gas, groceries, etc. Write down also how much you’re expecting to spend on eating out, movies, holidays, and other discretionary expenses. Now that you know how much money you should set apart, you need to think about what to do with what's left.
You can set some common financial goals, like creating an emergency fund, or starting a college fund for your future children. In addition to this, you can discuss together how to invest the savings in order to make more profits.
Finally, don't lose all your independence and your personal finances. As you earn your money, you shouldn't need to seek your couple's approval every time you'd like to buy something. Besides the bank account that you may open together, you should keep your former ones and allow each other some privacy about your personal expenses.
Your relationship is based on love, but also on trust. This is one of the most important strengths, which will help you avoid suspicions and doubts about money management after marriage. You should always have an open dialog. If anything in your financial life changes -from an unexpected debt to a welcomed extra bonus- you should tell your partner. As said, communication is key!