When you get married, personal finance becomes family finance. Follow our top tips to ensure a strong start to married life…
1. Make time to talk
Make it a priority to talk openly together about your financial situation. List all loans, credit card debts, pension plans and savings pots so that you both know where you stand. Get organised and decide if you are going to open a joint account (or not) and how spending will be split. For example, who will pay the mortgage? The household bills? Car loan?
You may decide to split – outgoings or one spouse may foot the bill for certain things. Every couple is different and there may be a huge difference in earnings. Whatever your situation, it is better to have a discussion early on to avoid confusion and potential arguments later down the line!
2. Start a budget
It’s not romantic, but budgeting can make a positive impact on your finances.
Here’s some budgeting basics:
• Calculate your joint income – even if you decide to have separate accounts it makes sense to have a joint account for mortgage and household bills.
• Choose a budgeting approach – a popular budget calculation is the 60/20/20 approach. 60% goes to ‘needs’ including mortgage or rent, food and clothes, and pension costs; 20% will be used for other loans and savings, and 20% for wants such as holidays, dining out and other treats. Having a household budget can help you plan your finances. We have created a household budget planner to help you get started.
• Track progress – a quick google search will provide you with thousands of online budget trackers. Or if you prefer, create your own simple Excel spreadsheet. Set an evening aside every month to keep an eye on your spending and saving. No one’s financial circumstances stay the same forever – you may need to adjust your budgeting approach as wages increase or children come along. Our household budget planner can also help you to track your progress.
3. Set goals
Setting short, medium and long-term goals can help couples to plan spending and saving and to become more financially secure. For example, in the short-term, do you want to travel or renovate your house? Perhaps you plan to start a family in the medium term, or or plan for your retirement and start saving up for the long-term.
It may be worth considering an ISA or topping up your pensions to help you to reach your long-term goals. There are several different types of ISA available to suit different needs and circumstances. An ISA allows you to save up to £20,000 each year tax-efficiently (remember that tax rules can change over time).
Whatever your goals, set your budget accordingly and be realistic. It may take some time to achieve a goal, but don’t be tempted to slip into debt to reach it.
4. Don’t hide spending habits
According to a 2018 survey, in 2 out of every 5 couples, one partner admits to lying to their spouse about money. Also, 75% said that lying about financial issues has had a negative impact in their relationship.
It’s common for married couples to have differing attitudes to spending money. Communicate openly about your spending habits and don’t hide debts – it’s important that your spouse knows the true state of your financial security, so you can work as a team to build your financial future.
5. Review protection
If you were injured or too ill to work, would your spouse be able to pay the mortgage, rent or household bills on their income alone? Income Protection could cover up to 70% of your salary until you are able to return to work.
Getting married is also the perfect time to review insurance policies. You may need to upgrade your home insurance to cover wedding jewellery and gifts. Research suggests that 150 guests could spend a total of £11,500 pounds on presents! Check that you have the right level of cover.
Life insurance is crucial once you are married, particularly if you plan to start a family. Review existing policies to be certain that you have adequate cover. You don’t want to risk leaving your spouse in financial difficulty if the worst was to happen – think about the amount that they would need to cover the cost of the mortgage, bills, loans and other expenses.
