Newlyweds and the ‛I Dos’ of money

By Finbar Garcia, LUTCF, FSS, MFA

Financial planning for young married couples and those planning to get married, is of paramount importance. Money can be a touchy topic, and no-one wants to be judged by their spending habits. As such, a couple needs to better understand their partner’s relationship with money before getting into joint financial commitments.

It’s one of the ‘I Dos’: “For richer or poorer, for better or for worse”.

Some of ways to avoid any issues are to write down the financial topics and luxuries that most often result in an argument. Don’t make them forbidden grounds, as they may pop up some time in your life and you will need to deal with them, so brainstorm ways in which you can tackle them.

Prepare a realistic budget – I am quite sure during the wedding planning phase, budgeting was most present and should continue to be part of your life. In your budget, allow certain luxuries that your partner cherishes, be it shoes, handbags or even other collectibles.

Before the marriage, during your courting, certain financial matters would have been discussed, some of them would be short-, medium- and long-term goals, having your own home, starting the family, planning those vacations, along with other lines of investments.

After the wedding, when reality sets in, you should continue to discuss those goals. Sticking to a budget regularly requires loving support and encouragement, so that it does not allow anyone to go overboard with unnecessary items and allows you both to stick to the plan.

Communicate long-term financial goals – Goals change over time so it is important to set aside time each month. Make it a ‘money date’ to analyse where you are and what adjustments need to be made to realign those goals. This is also a good time to discuss any large expenses like a new vehicle, so that you are both clear and it won’t be a surprise. Maintain open and honest communication regarding financial matters, as this will cause issues down the road and derail your financial goals.

Your Income – This is another area that needs special attention. As the two become one, your income should also become one. I don’t mean joining them, but not believing that ‘yours is yours…mine is mine’.

Once you prepare that budget and stick with it, the expenses can now be dealt with through both incomes, as some large expenses can be divided. By splitting the expenses, and of course putting savings first on your budget sheet, this will allow each partner to calculate their expenses and even shuffle around some to have a more equitable split. It does not mean that the one with the lower income must contribute half of the expenses.

Planning for children – Start early with this, make it part of your plan. While you may not feel ready for children, this part of family life costs a lot bringing them from diapers to scholars. Education planning is just as important as any part of your budget planning. Even if you are not ready, planning will be better than trying to adjust when the time reaches.

Planning for the unforeseen – Accidents do happen. Your vehicle may suddenly need repairs that you may not have catered for, or an appliance may breakdown and the last thing you want is to derail your plan. Create an emergency fund together, decide on a fixed amount and invest this every month. It is strictly for emergencies. This will allow you to continue with the bigger goals and maintain your timelines.

Get SMART

How do you set these goals? They must be SMART.

S…specific

M…measurable

A…achievable

R…relevant

T…time-bound

One of the biggest goals any couple wants to achieve is their own home. Living by in-laws may be an initial option based on circumstances, but don’t become a burden on other persons, especially if they know you are gainfully employed with a good income. Set this in motion early. Look at the location you want to live and start the family.

Cost is another factor. Do the initial groundwork—set an appointment with your bankers to get pre-approval based on both incomes.

As a requirement, the bank will hold the property as first security. However, you will need a life insurance policy on each spouse to the value of the loan. This is in the event of the untimely passing of either one. The insurance policy will liquidate the loan, freeing up the property.

Calculate the down payment and other fees needed. In most cases, you will need ten per cent of the value of the property as a down payment. Your ages are also important, as the duration of the mortgage is dependent on this and the instalments.

We will discuss more on the financial aspects of house hunting in my next column.

By using the SMART acronym, you can set in motion your first big goal collectively.

Marriage & Money

“There is no ‘my’ money, ‘his’ money or ‘her’ money in a successful marriage.

Regardless of who does or doesn’t work or who brings the most money; the

successfully married, pool their money together, plan together, budget together,

tithe together, give together, spend together and save together” —Isaac Kubvoruno. Together 4Ever.

Call me for more information on planning your financial future. Send your questions to myfinancialadvisor2020@gmail.com or call 620-1185.

Keep these in mind.

1. Budget.
2. Net Income…after all mandatory taxes and contributions.
3. Monthly expenses.
4. Savings amount, joint and individually.
5. Know the difference between a need and a want.
6. Split discretionary spending.
7. Keep those money dates to stay on track.