Valentine’s Day is just around the corner; often, this is known as the season of love and proposals. To help couples start their journey on strong financial footing, we’d like to offer these post-wedding money mistakes to avoid:
Not having the money talk. Discussing your finances can be a bit uncomfortable for many couples, especially in the beginning, but those who tackle it head on will be better for it. Understand your partner’s financial goals and spending habits. While you may have different answers, this conversation can help you develop an approach to money management from the start that works for both of you.
Not setting a budget. A mistake many couples make is not establishing a budget early on. After assessing your finances as a pair, determine how you’ll spend your money each month. Are there certain expenses you should be cutting back on and others you should be saving toward each month? Perhaps, you’d like to start saving for a down-payment on a new home or to start your family? Coming to an agreement on these things and setting a budget will be beneficial for the health of your bank accounts, your relationship, and your financial future.
Not having a plan for your accounts. There is no ‘right’ way to manage your accounts. Couples can choose to have exclusively joint accounts, a joint account as well as separate accounts for saving or personal spending, or keep things entirely divided. Discuss your preferences together and decide what makes you both the most comfortable.
Failing to set up an emergency fund. Life is full of surprises and, unfortunately, some of these surprises can be expensive. Having an emergency fund will help you avoid precarious financial situations should something come up. It’s important that you decide together how you’ll set aside the money.
Not establishing a minimum cost for discussing big expenses. While not all purchases demand a conversation, more expensive ones that impact the family budget should. Determine what that threshold is as a couple. For example, let’s say any purchase over $100 should be discussed together. For any expenses above that cost, you both should be in agreement on whether it’s a necessary purchase.
Forgetting to update your beneficiaries. Now that you’ve officially tied the knot, you should likely identify your spouse as the person who will receive the benefits of your will, life insurance policy, and financial accounts like your 401(k), checking, and savings. Don’t make the mistake of waiting for an emergency to arise to handle this.
As always, feel free to speak to a trusted First Bank representative with any questions. We’re happy to help you establish your new checking, savings, or retirement accounts to help you get started.
Source: ABA, American Bankers Association