Marriage is about sharing everything, but the idea of combining your finances is intimidating for many of you.
It does not matter how you had been spending your money before your marriage because that affected only your financial life. Now, you have moved in together after marriage. Therefore you must combine your finances to avoid an altercation.
Financial compatibility should be your priority after the wedding. Both of you should know each other’s earnings and contribution toward regular expenses.
A good rule of thumb says that you should try to bear an equal proportion of household expenses. However, you can be generous if your income is much higher than your partner.
It depends on the understanding of both of you. Here is how you can make your finances work as a team.
Get an insight into the current financial condition
First and foremost, you need to understand the current scenario of your financial condition. Figure out the amount of monthly cash inflow, the amount of debt you have taken on, the size of monthly repayments, and the savings you have stashed away.
Both of you are responsible for paying off your debts from your income as you have taken on them before marriage. Likewise, you should not mix through savings.
Once you get to know assets and liabilities, you will have an idea of how much you are left that you can use to manage your household expenses. Do not forget to look at each other’s credit report.
You may plan to take out a joint loan in the future. A lender approves a joint loan only after a credit check of both the applicants. Knowing your credit score beforehand can give you a chance to improve your credit rating in case it is not up to scratch.
Be on the same page
Since you are sharing contributing an equal amount toward household expenses, you must set a budget and track all of your spendings throughout the month.
At the month-end, you should sit together to look over where and how much you spent money. Make sure that you did not spend beyond the set limit, and if you did so, you should honestly tell it to your partner and adjust your next-month budget to fill the gap.
An honest conversation about your spending behaviour will help you be on the same page. You both will have an idea where your money is going and how you can improve your financial situation.
Jot down financial goals
Just meeting your regular expenses is not suffice. You will have to do financial planning for costs likely to happen down the line. For instance, you will need to buy a house, have funds for childcare expenses, put aside for retirement, and to make a big purchase.
Sit back and note down short term and long-term goals. Make sure that you both are consistent in your effort to achieve these goals. You may have a long to-do list, for instance, buying a car, vacation, house, etc.
However, it may be hard to put aside for all of them simultaneously. Set priorities and save money accordingly.
Bring a change in your lifestyle
Apart from merging your finances, you will also have to incorporate your lifestyle after marriage. It becomes essential in case of couples with income discrepancies.
Just because you can afford frequent dine out, it does not mean your partner is equally comfortable to contribute to such an expense. To avoid financial ruckus in your life, you should change your habits, so you and your partner be on the same page.
A rule of thumb says that you should have a plan to ensure how you are going to adjust to your new lifestyle.
Contribute to an emergency corpus
When you have a joint account, you often do not realise the importance of having an emergency fund. What if you lose a job or your partner catches a severe illness?
You may manage to make up for the loss in case any one of you fail to put money toward the joint account due to any reasons, but you will still have your back to the wall.
Try to build an emergency cushion separately because if you run into a problem, you will have money to dip into straight away.
However, if you still find a shortage of cash, loans in Ireland are always out there to help you tide over.
When you get married, your finances should not be separate. Working as a team will better help you control your overall financial condition. Bear the tips mentioned above in your mind, so you gain financial freedom and peace even after marriage.