Important Financial Tips For Newlyweds
You’ve just paid for one of the most expensive life events you’ll ever have. So how do you make sure that your finances also live happily ever after?
Jeremy is passionate about personal finance and writes the blog BecomeAMillionaire.co.uk to help people reach financial independence as soon as possible. Below are some of his best tips for ensuring everything runs smoothly post wedding.
#1 – Budgeting
You’re a team now and it’s important that you are working towards the same goals and that you have an agreed budget. Look at all of your outgoings, credit cards, rent, mortgage payments, student loan repayments, day to day costs and all of your income too. Set some goals around how quickly you want to pay off any debts and what you expect to spend from month to month with a view to keeping some savings too. If you agree everything upfront, you know where you are today and where you are trying to get to. This should lead to fewer arguments.
#2 – Planning for the unexpected
At some point in your life, the unexpected is likely to happen. One of you may lose your job, want a career break, take time out to look after children, or have an accident. You should aim to have 3-6 months salary safely tucked away in an easy access savings account. This will help ease the immediate pressure if and when one of these unexpected events happens.
To really protect you from the more serious events, such as poor health or even worse, you should look into both life insurance and health insurance policies that would pay out in these circumstances. You want to ensure that money is the last thing on your mind if the worst comes to the worst.
#3 – Planning for your future
Retirement may seem a long way off, but it’s going to come much quicker than you think. It’s so much easier to achieve a financially secure retirement the earlier you start putting money aside for it.
For a comfortable retirement there is a general rule of thumb about how much you should be saving in your pension. Take the age you start saving for your pension and halve it. Put this % of your pre-tax salary aside each year until you retire. So if you are starting to save at 34, you should be looking to save 17% of your salary.
If you have a workplace pension and the employer contributes to it, you should look to use it. If not, you can look at taking out a SIPP (Self Invested Personal Pension) which will give you some tax advantages or a Stocks and Shares ISA. Being invested in the stock market will give you a much higher return on your savings in the long term, though this is riskier than holding your savings in cash.
Investigate your options here as there are some differences between the benefits of a pension vs ISA. It’s important however that you have your own schemes in your own names and don’t put all of the investment into just one name. You both have tax allowances that you should be using.
#4 – Communicate
You are both on the same side. It’s really important that you both understand your family budget, you aren’t hiding anything from each other and you are open about your finances. This will help your overall relationship with money to remain positive as well as share the pressures that personal finance can bring.
Sure, play to your strengths. If one of you is better than the other with numbers then take a lead, but it’s really important that both partners retain some ownership over the budget and that you are clear on what is going on.
Secondly, there will be times when you have a blowout, spend a bit more on a holiday than planned. The important thing is to make sure these are infrequent and to forgive each other and move on if and when it happens. There’s bigger fish to fry.