An important part of the wedding vows is “for richer or poorer” and we’d all prefer the former! But after the euphoria of the wedding day passes, many couples leave their financial management to chance with money often becoming a bone of contention as each has different goals and attitudes. It’s no accident that money features prominently in divorce courts.
It’s unlikely that anyone would vow on their wedding day “I will love and honour you, keep only one credit card and pay it off every month”, but seriously, couples need to develop their own financial vows. It’s not very romantic however this five-step guide can save a lot of heartache later on.
Step 1 - Prioritise
Agree on what is most important to you both – in broad terms there are not many choices. You could spend big on lifestyle. You could save to afford a house, children, retirement or some other goal. You could spend on your own personal development such as education. Once you’ve agreed on a list, give it a name (something original like “Our Money Plan”), write it down and post it on the fridge where you see it every day.
Step 2 - Know where your money goes
If you can’t measure it, you can’t manage it. However boring it may seem, you need to look at your spending and decide if it is consistent with your priorities. This can be easily done by regularly checking your bank statements.
Step 3 - Don’t eat your money
Most cash spending goes on food, so if you ever wondered where that $100 you withdrew from the ATM only yesterday went – you probably ate it! Reduce impulsive food buying by eating before you shop so you’re not hungry and shopping once per week. One trip to the supermarket per week will also cut your petrol costs.
Step 4 - Shop wisely
When you are spending on larger items, think before you buy. Do you need the big brand name? Maybe yes on electrical goods but maybe not on new clothing. Comparison-shopping does make a difference and there are many organisations to help you find the best deals, particularly via the internet. You not only save time, but petrol.
Step 5 - Keep talking
Having a plan is no good unless you review it from time to time. This is a time to leave the boxing gloves off – because you will both make mistakes and maybe even cheat on your agreements. Your priorities will change over time and your Money Plan will change too. It’s important to agree on your goals, maintain good communication and keep your sense of humour.
Whilst these steps were written for newlyweds, they are just as appropriate for any couple, families, empty nesters and retirees... it’s never too late to start.