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 dedicated to helping you protect your world for less.
We can present you with quotes from a range of providers for level term life insurance, mortgage protection insurance and critical illness cover. As a result, if the worst were to happen, we can help you obtain financial peace of mind for your family at the right price.
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