Money can't buy happiness, right? In the UK, disagreements
about money have become the number one reason for couples getting divorced.
Once newlyweds go from richer to poorer, maintaining that sense of marital
bliss can become more difficult. If you have just married, it's probably a good
idea to discuss finances with your new spouse as soon as possible to ensure
you're both on the same page and avoid any misunderstandings further down the
road. Here are some scenarios to consider when thinking about how to manage
finances in a marriage.
This is the first financial decision that most married
couples face. You can opt to put your money into a joint account or keep things
separate, and both approaches have their pros and cons.
For instance, joint accounts simplify money management and may
help to breed trust within the relationship. On the other hand, individual
accounts can help maintain a sense of independence that some people prefer.
If a mortgage and children become factors, married couples may
find merging finances makes things easier. However, there's no need to rush to make a decision unless you and your spouse are 100% comfortable with the idea.
Debt can be damaging when one person has to shoulder the
burden. But once you are married, your spouse's debt can impact your life,
which may end up doubling the problem.
If you decide to keep your finances separate, from a legal
standpoint, you won't become liable for credit card debt and loans taken out in
your spouse's name. Even so, your partner's credit rating will have an effect
on any joint credit you might want to secure in the future.
All things considered then, it's best to try and start your
life together on a firm financial footing. So, if possible, now is the time to
work together with your partner to eradicate debt at the same time as creating
a plan to avoid racking it back up again.
Are you planning to begin married life by starting a family
or buying a new home? Then setting a budget can help you generate the funds required
to pay for your joint life goals.
A big part of budgeting is assessing your expenditure to identify
any disposable income. You can then see if any of your outgoings can be cut and
put towards your financial objectives. Start by reviewing your individual
spending patterns over the last few months and identify whether there are any
areas where you can both reduce spending.
After that, set a limit on how much you can afford to spend
on food and going out, and how much you need to ring-fence for bills. To ensure
that you don't get into debt, it is also important that you allocate funds for
unexpected expenses - such as car and household repairs.
Finances often fluctuate according to your situation and any
changes in income. For this reason, you and your partner might find that
setting a budget needs a flexible approach. So, if you need to make budgetary
adjustments, especially within the first few months, it shouldn't be a cause
for panic.
To live a 'comfortable' life in your twilight years with a
post-tax annual income of £25,000, Research
by Which suggests that you will need a pension pot of £262,500 if
purchasing a joint-life annuity on top of your state pension. This assumes you
will receive an annual state pension of about £14,000 as a couple. If you
haven't already, it's a good idea to start building firm financial foundations
as soon as possible.
Investing into a pension or tax-efficient ISA are both
viable options for building up sizeable savings. However, to maximise their
investment potential, married couples may wish to seek the help of a financial adviser
to plan the standard of living they want in later life.
Even if you are starting married life debt-free and on
course to enjoy a wonderful career, you might still find yourself woefully
underprepared for an emergency. You may want to build an emergency fund to
cover any unexpected expenses. A good rule of thumb is to save 3-6 months
expenses in an easy access savings account to cover essentials should either of
you lose your jobs. In addition, you could consider insurance to add an extra
layer of protection. At Compare Cover, our speciality is life cover, and we are
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