Financial strain at any capacity has the ability to impact every area of your life, whether you realize it or not. From your emotions and your decision making, to your stress levels and willingness to participate in activities—your finances dictate how you function on a daily basis.
Many newlyweds or couples preparing to tie the knot neglect to consider how deeply their relationship can be impacted by both their own and their partner’s financial history, as well as the money decisions they’re currently making together.
Here are some of the most common financial mistakes couples make that can turn into major issues in a relationship if not addressed properly.
1. Going in Blind
If you feel inclined to avoid talking finances with your partner, or current fiancé, you’re not alone. Many couples find this topic to be straining, overwhelming, and would rather just cross that bridge when a financial emergency arises. The danger in this lack of communication is the repercussions this can have overall on your financial health in the future.
Without discussing your spending and saving habits/opinions early on, it can be difficult to build a financially secure life together without setting yourself up for a disagreement down the road. You’re putting your relationship at risk the first time an unexpected situation comes up that requires a lot of financial attention.
If you do not have a mutual understanding of one another’s financial situation or decision making when it comes to money, it’s very likely this will become a tense situation with the potential to cause a divide in the relationship. Take time to have these more difficult conversations to guarantee you and your partner are on the same page moving forward.
2. Failing to Create a Budget
Budgeting is an important practice at all ages and stages of life, but certainly important shortly after getting married. For many reasons, your overall financial picture will be drastically changing once you’re married. From the expenses of covering a wedding to the potential to have multiple income streams to support yourselves as a couple, newlyweds must learn to navigate their new financial situation.
Discussing your budget goals and plans together can help guide you in making better decisions separately, which will positively impact your financial state and emotional response to situations down the road. There are plenty of online budgeting guides that can help you and your partner set yourself up for success and be able to take that vacation, attend a work conference, enjoy date nights guilt-free, and support yourselves without financial-related stress.
3. Overspending Early On
As a newly married couple, it makes perfect sense that you would want to splurge a little and celebrate your commitment to a lifetime together. It’s not rare for a couple to have a tendency to overspend financially in order to experience the wedding of their dreams, buy a home they cannot truly afford at the time, and go on a lavish honeymoon very much out of their budget range.
Although it might seem reasonable to splurge a little and compare your own plans to your friends and family, consider the negative effects of going into debt right off the bat.
Instead, pace yourself and realize that you can save up for your dream home and take that trip abroad once you’re more financially settled. The good news is, in the meantime, there are plenty of affordable vacation options for couples, money-saving hacks, and budget moving tips that can keep you in line during your life transitions, while still allowing you to have the time of your life.
4. Neglecting to Plan and Secure their Future
During this busy and exciting time, it’s very important that you take time to live in the moment and appreciate all that you’ve experienced together as a couple, while preparing for what is still yet to come as life partners.
With that being said, this is a critical time to start looking toward the future that you’re about to build together. You’re probably starting to consider what you want your family to look like—such as determining if you see children in the near future? Where will you be living, a new town or city? What types of jobs will you maintain and how much money will you earn?
Avoiding these questions early on will not do you and your partner any favors. In order to start securing your future now, it will be in your best interest to purchase a life insurance policy that covers all your needs, while also providing you protection for the life you’re about to create together.
There is no need to feel overwhelmed by this, and you can even schedule a time to review with a professional insurance representative to help you navigate the options available. This will help provide you with peace of mind knowing that you’ve taken steps to secure your financial future and select insurance that suits your needs as a couple.
5. Ignoring or Putting off Debt
Debt is one of the trickiest and most stressful situations, especially newlyweds, can face in their relationship. The reason being, there is a possibility one of you has outstanding debt that has never been addressed while the other is in a good place financially and is building savings.
It’s crucial that you spend time developing a plan of attack and figure out how you want to support one another, create a stable financial future, and determine the best way to pay off this debt for your situation. Ignoring debt or allowing it to get worse will only cause problems in the future, which is why it’s recommended that you discuss your debt and create a solution together—rather than figuring it out as you go.
6. Forgetting to Plan for Emergencies
It’s safe to say that as newlyweds, remaining positive and is a great way to support and build a healthy relationship. In combination with that mindset, it’s also suggested that you prepare for a worst-case scenario and maintain a just in case fund. Hopefully you don’t need to resort to this, but should anything unexpected occur, having the extra protection can help keep balance and support you during a tough time.
This could be anything from an illness, a maintenance issue, a natural disaster, a family health concern or any other situation that has the potential to impact your life and finances suddenly and negatively. Consider setting up an emergency fund, even if that means tucking a small portion of your paycheck away each month to build this safety net for you and your partner to avoid unforeseen strain in the future.
7. Not Having Open, Honest Conversation
If you avoid the tough conversations you miss out opportunities to prepare, problem solve, and have meaningful communication about where you desire to be years from now. This doesn’t mean you need to have it all figured out because the reality is, no one does. Being open about your financial state, your savings, and any debt will allow you to address reality and start working toward improvement.
The only thing scarier than talking about how to handle money is having to discuss the fact that you have no plan to pay what you owe or are struggling to keep up with your daily expenses.
Just like marriage, personal financial management requires a commitment between two people. It requires you to be intentional, open, honest, and intelligent with your decision making if you want to be successful. There is no right or wrong way to do this, but you will need to continue to plan, prepare and regularly revisit with your partner in order to ensure you’re following through on your commitment to better each other’s lives and be able to afford your goals together.