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 if each has different goals and attitudes.
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 could save a lot of heartache.
Step 1 – Prioritise
Agree on what is most important to you both. You could spend big on lifestyle. Or save to afford a house, children, or some other goal such as further education. Once you’ve agreed on your goals, give your plan a name (get creative!), put it on paper (an App is too easy to forget about) and post it on the fridge where you see it every day to keep you focused.
Step 2 – Know where your money goes
If you can’t measure it, you can’t manage it. As boring as it may seem, you need to look at your spending and decide if it is consistent with your priorities. This can be done by checking your bank and card statements every month. Most online banking programs offer this reporting feature making this step very easy.
Step 3 – Don’t eat your money
Most spending goes on food, so if you ever wondered where your money goes, you probably ate it! Reduce impulsive food buying by eating before you shop so you’re not hungry and shopping only once per week. One weekly trip to the supermarket will also cut 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 websites to help you find the best deals (be aware that a lot of comparison sites only show those providers who have paid for a listing so the reviews can be skewed).
Step 5 – Keep talking
Having a plan is no good unless you review it regularly. 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, above all, 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.
For help with your financial planning please call our financial advisors for an appointment. Call (02) 4926 2300 or email our team