Entering the journey of marriage is an exciting adventure filled with dreams, hopes, and new experiences. Then comes realistic thinking like planning like to plan a budget. Budgeting is one of the first steps you need to take with your partner to set a seal on a smooth journey. For many newlywed couples, combining finances and establishing a joint budget can be both a practical and difficult challenge. Here’s a guide to help you through the process of creating a budget that aligns with your combined goals.
Table of Contents
1) Open and Honest Communication
Open and honest communication is the key to any budget. You should start by having a non-judgemental conversation about your financial history and goals. This means sharing your debts, savings, income, spending habits, and financial dreams. Knowing each other’s financial history will help create a realistic budget.
2) Define Your Financial Goals
Setting financial goals is important for creating a budget. These goals can be short-term, like saving for a vacation, or long-term, like buying a home or planning for retirement. Make sure these goals are specific, measurable, achievable, relevant, and time-bound (SMART). Setting clear goals will set you on the right path to a well-rounded budget.
3) Add Up Your Income
Add up all your individual incomes to get a total household income. This will include salaries, bonuses, freelance income and any other income. Knowing your total income is the starting point for planning your expenses and savings.
4) List Your Expenses
List all your monthly expenses. These can be fixed (rent/mortgage, utilities, car payments) and variable (groceries, dining out, entertainment). Don’t forget to include irregular expenses like insurance premiums, annual subscriptions and holidays. Tracking your spending for a few months will give you a good idea of where your money is going.
5) Save
Saving should be non-negotiable in your budget. Aim to save at least 20% of your income. This can be split into different savings goals like an emergency fund, retirement fund and specific savings for your financial goals. Automating your savings will help with consistency and reduce ther temptation to spend.
6) Create a Debt Repayment Plan
If either or both of you have debt, you need to create a plan to pay it off. Prioritise high interest debt like credit card balances. Consider using the debt snowball (paying off the smallest debts first) or the debt avalanche (paying off the highest interest rate debts first) to chip away at your debt.
7) Create a Spending Plan
Now that you have a clear picture of your income, expenses, savings and debt, create a spending plan. Allocate specific amounts to each expense category based on your financial goals and priorities. Leave some room for fun and leisure activities so you don’t feel deprived.
8) Monitor and Adjust Your Budget
A budget is not a set-it-and-forget-it tool. Review and adjust your budget regularly to reflect changes in your financial situation and goals. Schedule monthly budget meetings to discuss progress, celebrate successes and make adjustments.
9) Use Budgeting Tools and Apps
There are many budgeting tools and apps that can make managing your finances easier. Tools like Mint, YNAB (You Need a Budget) and Personal Capital can help you track your spending, set goals and monitor progress. Find one that works for both of you and stick with it.
10) Plan for the Future
While managing your day to day finances is important, planning for the future is equally important. This includes discussing and planning for big life events like buying a house, starting a family or even starting a business. Having a plan in place will help you manage these events without financial stress.
11) Get Professional Help
If you’re feeling overwhelmed or unsure about parts of your budget, don’t be afraid to get professional help. A financial advisor can give you valuable insights and help you create a financial plan. For example if you have complex financial situations or are looking to make big investments, consulting with a professional like andreu palma can be helpful.
Wrapping up your budget
Planning a budget as a newlywed couple is a crucial step to financial harmony and success. By communicating openly, setting clear goals and tracking your finances, you can build a solid financial foundation for your future together. Remember the key to a good budget is flexibility and being willing to adjust as you grow and change together. With a budget in place you can enjoy your newlywed life with peace of mind and financial security.