Marriage contracts and ceremonies in major religions and cultures around the world essentially cover the financial aspect of the unions of two individuals. Whether be it Christian marriage vows – “for richer, for poorer… until death do us part.”; or be it Hindu marriage vows for nourishment, provision and prosperity; or the Muslim marriage contract which necessitates the inclusion of monetary compensation (Haq-mahr) clause. You can’t deny the importance of money management in marriage, therefore, to know money management tips are a must. It permeates all the four important factors of a successful relationship: Love, Care, Respect and Trust, though money can’t buy you these. But you spend your hard-earned money definitely to show your love and care towards your spouse and to build a relationship of mutual respect and trust.
Money Management Tips – Role of Money Management in Marriage
Take a look at a study conducted by a US-based media company – published recently (2019)- it listed top eleven reasons for divorce in the USA with financial problems ranked at five, claiming that approximately 36% of the stress towards divorce comes from the financial side, a considerable percentage isn’t it.
Well, spending less and saving more is not the absolute solution to financial distress. Money management is more than that. Here’re some tips on how to manage money in an effective and efficient way.
1. Developing Understanding towards Diverse Lifestyles and Set-ups
Knowing each other’s lifestyles and interests make behaviors more predictable and tolerable and give a good ground for planning. Don’t assume that you already know the love of your life. Start discussions about money management as early as possible and don’t wait for financial problems to arise for initiating it. Since marriage is a common practice in all cultures, religions, social and financial set-ups; so how much each one of these affects the financial aspect of your married life depends on the unique combination of these set-ups. The way you celebrate your social and religious events affect your spending and saving patterns. Discuss your current spending and saving habits, your incomes, and debts, if any. Don’t hide your craze or passion for any of your hobbies that can have a serious impact on your budget.
2. Planning and Setting your Financial Goals as a Couple
Nothing can be managed effectively and efficiently unless you plan it. So, identify your main areas of spending and estimate major expense items in each. How much you allocate for each spending head – food, shelter, clothing, health care, education and entertainment – is going to portray your lifestyle. Beware of the extreme behaviors of lifestyle creep and self-deprivation. Find a way in between and be realistic keeping your financial status in view. Also, set a range for tolerable deviations within which you can be flexible at times. Skipping your honeymoon to save some money would be a bad idea just as much as being in debt once your dream honeymoon period is over.
3. Organizing and Allocating your Funds
Combine your after-tax incomes from different sources before any allocation. You can choose to organize and manage using some financial planner software for ease. But your behavioral aspects will determine the successful implementation of your financial plans. Consider using that 50/30/20 rule of budgeting. It is equally applicable to individuals and couples. It guides you to spend 50% of your income on the essentials – housing, transportation, groceries, utility bills etc. – 30% on your “fun bucket” or wants – hobbies, entertainment, shopping, dining out etc. – and 20% on savings to fulfil your long term financial goals or to meet some unexpected expenditures.
If you’re planning to extend your family, estimate all the costs related to pregnancy, delivery and the postpartum period and include it in your budgeting process. Don’t forget to include your cyclical expenses like property taxes, subscriptions, license renewals etc. you may want to create a separate fund for these or bring a seasonal increase in your savings when these expenses are about to get due.
4. Monitoring, Controlling and Adjusting your Budget
Funds management plan won’t really work if you can’t resist your spending temptations or can’t control that impulse buying behaviour. Things might get a little more difficult if both of you are spenders. So, you’ll definitely need to discipline yourself as to shopping and keep a vigil eye on spending.
Decide on who’s going to spend on what? Distribute responsibilities for a budgeted item to the one who has control over that expense like of you are the one in-charge of daily menu and planning dinners or parties for friends and family, you must be the one managing funds allocated to grocery and entertainment. If your partner is quite often engaged in activities like repairing the damaged window screen or repainting over that chipping paint on kitchen walls, maintenance funds should be handed over to him/her.
You may have planned your budget diligently and followed it strictly, they’re still going to be some uncertainties beyond your imagination. How many of us had imagined going jobless or confined to our homes due to some global pandemic like COVID-19. You may make a major change or adjustment in your budget under such circumstances.
5. Using Life Skills to Improve your Lifestyle
Every individual poses some natural or learned set of skills. Use your existing skills effectively to reduce your out of pocket costs; or, you could learn a new skill to make some passive income while working from your home. A simple act of cooking meals and having knowledge about the nutrient value of whatever you cook at home not only reduces food and entertainment expenses, but it also gives you more control over components of your foodstuff, thus, reducing your current and future health costs. If you can mend or alter your clothes, upgrade and reuse old items to decor your home then you can save more or transfer some funds from the essentials to your “fun bucket”.
6. Opening Joint Account or Separate Accounts – One of the Considerable Money Management Tips
Whether you belong to a culture where both of the partners earn and make contributions to household budget; or you come from a culture where the husband is mainly responsible for the money-making task, in either case, consider opening a joint account. In the first case, you could both pool your funds and the partners responsible for his/her respective activity can withdraw funds as and when needed. And in the latter case, the earning partner will be the sole contributor. Be considerate of each other’s individual need for privacy and independence and consider maintaining separate accounts as well for controlling individual savings within a certain limit without committing financial infidelity.
7. Setting a Boundary Between Financial Infidelity and Financial Liberty
Holding secret bank accounts and giving large secret loans to friends or family member or taking such loans from them could have serious consequences on your financial status and also on your spouse’s emotional status– how shocking could it be for you that your significant other took a huge loan to arrange that dream wedding and honeymoon trip and now it’s time to repay. That euphoric sense of love might terminate immediately. On the other hand, you might not want to disclose every penny spend on your other family members or friends. You must set a healthy boundary between these two to have a balanced and blissful relationship with your spouse.
8. Choosing your Money Management Mantra is One of the Proven Money Management Tips
Don’t underestimate the power of your life philosophy. Identify it because it ultimately influences your actions. Here’re just a few quotes representing the financial aspect of the philosophy of life:
- Who so observed economy, he never suffered penury.
- Never spend your money before you have earned it.
- Live within your means.
Discuss your ideologies as a couple and set rules of dos and don’ts to discipline your financial behaviour. Motivate, appreciate and acknowledge each other’s efforts and remind each other when deviations are about to touch the limits. Maintaining financial peace in your married life and elevating your lifestyle within your means could set you on a road to a successful long-term relationship.
And do share your views via our comment section on these money management tips for the newly-weds.
Also Read: Evaluate your spending habits for a better understanding of your finances and to improve your financial health.