Getting married involves a real change in how you deal with day-to-day life, and your finances are just one component of this. If you’re heading down the aisle in the near future, there are some important financial decisions you and your partner will need to make.
The Relationships Indicators Survey from Relationships Australia found that 71 percent of couples believe money concerns are more likely to push them apart than bring them together. Rather than take the risk, make sure you consider these issues before saying “I do”.
Open up lines of communication
Although it may sound like a cliche, being open with your partner can make a real difference when it comes to your financial future. A survey from YourTango.com found that in 65 percent of divorce cases, a lack of communication is cited as the main reason for the separation.
Debt is also a deal breaker for many couples. RateCity research found 49 percent of women would give their man the flick if they discovered he had substantial debt but are not forthcoming with their own debt – with just over half of the surveyed participants claiming they’d disclose their personal debt to their partner.
You both need to be willing to talk about money, as knowing where you stand right from the start will help you better understand each other’s views and intentions.
Set up a budget
Budgeting skills are essential at any stage of life, but perhaps even more so once you’re married. If you’re moving in together for the first time, then you are both likely to find it difficult to adjust to the new financial situation.
One way of keeping problems at bay is to establish a budget. This means weighing up how much money is coming in and what your bills equate to, before deciding how much you need to save.
Establish financial goals
Having financial objectives in mind can have a real impact on how you view your financial situation. For example, if you’re thinking of applying for a home loan in the near future, then your savings goals might need to be higher than if you’re saving for new appliances.
Financial institutions recommend saving at least a 20 percent deposit on a new home. This way, you can put yourself in a strong position with lenders, while avoiding lenders’ mortgage insurance.
Getting married is also a good time to discuss whether you’re likely to hold a joint savings account or merge your finances once you’re hitched, or keep your money separate, at least for the time being.
There are advantages and disadvantages to both. Relationships Australia asked people with individual accounts why they had decided to this, with the main reasons being because they hadn’t had time to merge their finances, while others wanted to be more independent.
Taking out insurance
Taking out insurance is something that many couples decide to do once they’re officially married. After all, it makes sense to protect each other and any extended family you might have if the worst should ever happen.
There are so many different types of cover available that it’s a wise idea to weigh up each of them individually. For example, you might find that life insurance is the right option for you, or that income protection cover would offer you the greatest peace of mind.
Build an emergency fund
It’s good to have a financial safety net in place, which is something you should both work towards. This will come in useful whenever you need money at short notice, such as if your property requires emergency repairs, or you suddenly need to buy a new car.
Westpac advises that saving just $10 a week will start to add up, giving you $500 to fall back on at the end of the year. However, there’s no reason why you can’t be more ambitious with your savings goals!
Read on for our simple guide to getting financially ready to start a family.