Financial Planning Tips for Newlyweds to Stay within Budget

Financial planning can be a tricky topic for newlyweds as they are starting a life together. It’s not easy to move away from the mindset of caring only for your own needs into one of balancing those of another along with it. The problem is that many couples don’t go through the process of figuring this out. They are so swept up in their romance that they forget this critical step, thus paving the way for future arguments that lead to stress.

This post is designed to help couples with financial planning in a way that allows them to create and stay within a specific budget.

Work out the Basics

The first step to financial planning and asset management is to work out the basics. Share all your overall goals to see where each other stands. In most cases, you’ll have to find compromises to develop a joint approach. Remember that not everyone values money in the same way. There are no “right” or “wrong” answers here. It’s all about getting to know each other’s habits and working to find an appropriate middle ground.

Determine your Combined Income

Once you understand each other on a deeper financial level, it’s time to sit down and start hammering out a budget. Start by listing all your income sources. Don’t leave anything out here.

• Job income

• Side-hustle income

• Bonuses

• Tips

• Dividends

• Rental Income

• Royalties

• Refunds

Once you have listed each of these income sources, estimate how much you’ll receive. Some of them are not going to have exact numbers every month, so guess on the lower side.

Figure Out Your Household Needs

By this point, you’ll have a fair understanding of each other’s financial style and sources of income, so it’s time to work out more of the details. Household needs are your bare minimum expenses like car payments, debts, utility, food, and rent or mortgage payment. One mistake

that couples make with financial planning is that they spend too much on many consumer expenses. There are ways that you can spend less here.

• Buy a less expensive car.

• Cut back on unnecessary groceries.

• We are downsizing your home.

But these are the items you must be able to afford before adding any luxury items.

Set Long-Term Goals

Setting long-term goals is an essential part of financial planning and is another area where most people fall short. Having a budget in place isn’t enough. Everyone needs goals they can work to achieve because it provides direction. These long-term goals will help you understand when you can buy a home or start a family. Maybe you both share the goal of taking an extravagant vacation?

Specific goals also help keep you motivated when cutting other expenses. You’ll be less tempted to splurge on a new, fancy car if you have the purpose of buying a home. When you have no plan, it’s so much easier to justify overspending.

Here are some examples of reasonable long-term goals to set:

• Paying off a specific debt. The most common debt people try to pay off early includes their student loans. Paying off these large debts also lowers overall monthly expenses.

• Savings goals will serve as emergency funding to help through difficult times. Savings milestones are generally the first goal that people choose, but you have to attach some kind of motivation to it. Just saying, “We plan to save money” is not enough.

• Set up and fund retirement accounts.

Financial Modeling Tools Can Help Stay on Course

Couples have a lot of options here, so this choice will depend on your life and how complicated your financial situation is. Regardless, you must track your finances in a clear, precise way. Let’s look at a couple of options:

1. Create a spreadsheet that lists all your income sources, and your expenses, and tracks long-term goals. This is the perfect choice for couples who don’t require complicated asset management.

2. Invest in a budgeting app. There are a lot of powerful tools on the market that can even link to your accounts. They automatically track expenses and can send out alerts if you start overspending.

Schedule Regular Meetings with Your Partner to Discuss Finances

Treat finances like a business and meet regularly to discuss your plan of action. Use this time to make adjustments, tweak your goals, and revise your overall budget. Use this time to address poor spending habits and find common ground. Not only will this help keep your financial planning on track, but it will save you from countless arguments about finances.

I also recommend you make this a fun conversation, maybe having it over a nice dinner. The key is that you make sure you and your partner are having this discussion.

Keys to Successful Budget Planning with Your Partner

Follow these additional rules to ensure that your financial planning strategies succeed:

• Create a budget before you get paid. This ensures that you are proactive instead of reactive.

• Set your budget up to align with pay dates. This allows you to line up expenses with income and makes it easier to keep track of them.

• Expenses should be tracked jointly so that you keep your financial planning consistent.

• You must both agree on a plan and be willing to compromise on certain things.

• Once a budget is set, do not deviate from it without having a joint discussion.

• Communication is essential here. Finances are the leading cause of arguments between spouses and partners, so you must both be willing to communicate any concerns you might have with your plan.

Final Thoughts

Don’t allow finances to put your relationship under a lot of stress. Address this vital issue early on to avoid future arguments. Financial planning will help both of you to establish better habits and to build a stable foundation for your relationship.