Comprehensive financial planning before a wedding is nothing short of crucial. Both short-term and long-term financial goals must be shared and discussed by both partners prior to the big day. Walking in blindly is too much of a risk – and the potential consequences can be avoided by simply being honest with one another. Big money mistakes have and will continue to destroy marriages.
Common Financial Mistakes Made By Newlyweds:
1. Not making a budget together
Planning a budget may be tedious, but this is the secret of most successful partners. Choosing to do the budgeting alone won’t work even if done very carefully – the lack of input from one partner requires a lot of guessing on the part of the one doing the budgeting – and making a guess is what gamblers do. Another undesirable scenario is when the partner who’s willing to do the budgeting is not very good at it. Whenever one or both partners are unwilling to put their heads together when it comes to budgeting this may ultimately lead to a significant financial crisis in the near future.
2. Not resolving debt
When two people get married – plans to have kids, get a larger home or start a business will begin. This will encourage both to save more, but outstanding debts should not be ignored.
When debts are left unsettled, the debtors may end up paying significantly higher interest than they have to. Further, this may start an endless cycle of taking out loans just to pay off debts.
3. Not documenting agreements
One good financial strategy that newlyweds should put in place is to combine part of their income to come up with a household budget. Some advantages of doing this are tax benefits, immediate access to the money in case of emergencies, and inequalities in earnings are smoothed out. To get the most out of merging finances, ground rules should be made and documented and, preferably, saved in a digital format. Failure to establish rules in black and white may cause stressful situations and/or blaming the other partner if and when things go south.
4. Not creating an emergency fund
Whether married or not, the existence of an emergency fund is imperative. No one can foresee the future and having an emergency fund is a great way of protecting oneself from unwelcome circumstances. Most experts agree that rainy day funds should consist of three months to half a year’s worth of expenses. When couples who have no emergency fund encounter a sudden calamity out of the blue, they will be forced to look hastily for family loans or other lending options – a process that creates unnecessary stress and often leads to very unfortunate outcomes.
5. Overspending on the wedding
Couples should be aware of each other’s financial situation and make wedding plans accordingly. If a grand ceremony isn’t affordable or within your budget, there’s no reason at all to pursue it. In fact, smaller weddings are even more personal and intimate. Keep in mind that a marriage ceremony only lasts for a day – and starting a married life in debt caused by exceeding the wedding budget is not a good thing.
What Couples Can Do:
For romantic partners planning to get married, get a home or raise kids, seeing a financial advisor along the way can help them proceed as smoothly (and create less errors, too) as possible. They’ll get the results that they want, minus the headaches caused by constantly guessing what financial steps to take next.
For couples who are hesitant to meet with a financial planner, or those who are on a tight budget, we recommend checking out WalletJoy’s free-to-read articles and tips which not only focus on weddings, but also on travelling, buying a home, starting a family and much more. WalletJoy’s content aims to help couples navigate through the nuances of establishing a strong financial foundation as a couple, budgeting and paying for a wedding, as well as tips and information for tackling debt and saving for major life moments. We highly recommend WalletJoy as a reliable go-to resource for financial information as couples plan for the next chapter of their lives.
A Final Word
Recent statistics show that issues over money is now the second leading reason why divorces happen, just behind infidelity. Whatever economic status couples are in, an in-depth financial planning must be accomplished before and after tying the knot.