Financial Honeymoon


WHILE love, a great relationship and the thoughts of a long-time future together stay top of the list for newlyweds, it is no secret that the majority of marriages collapse due to the stresses and strains of financial mismanagement. Before agreeing to marry, each party should discuss and agree how the money will be managed once you are married and to consider all of the financial implications that marriage brings to your bank account.

There are many advantages that can be gained, in the financial sense, for newlyweds. By setting up a joint bank account you will be saving on regular bank fees because you will be maintaining one account, instead of two. By having two salaries lodged into the one account, your overall balance and interest payments may be higher and lenders of finance will usually be pleased to lend to two people, rather than one, which improves your credit lines and the size of your potential loans.

TD Bank in the US indicated that 42% of married couples also keep a separate savings bank account in addition to the joint account. This can be for many reasons. Long gone are the days when only the man went to work and managed the money. In present times, most couples come together from a point of having complete independence previously and the ability to manage all of their finances alone. Some individuals may wish to maintain a level of independence, financially, in the event of the marriage moving through a rocky period.

For newlyweds, they marry for better or worse and this may include a poor credit history from the spouse. Where you choose to take on a loan or a mortgage, you will become jointly responsible to clear the debt, even where one spouse fails to make a contribution. For this reason it is better not to rush into a mortgage as soon as you are married because it will become the largest financial burden of your lifetime and should be clearly identified and managed over the course of many years. Experienced individuals will tell you that it is better for your marriage and your finances to identify a property that you can afford, well within your means, because you can always upgrade at a later stage.

Where you are able to live on one salary and save the other, you will be able to control your finances should one of you become ill, die or seek a divorce. When your income is interrupted either voluntarily or through an unexpected channel, perhaps by adding children to your marriage, your income and expenses may change dramatically.

This is where insurance becomes an important factor in your financial planning. Life insurance will help you replace an income that is lost or you may wish to choose to protect any income you will lose through permanent disability.

Openness among newlyweds about their finances and agreement on a strategy to plan how to spend the income will reduce the often damaging, and unnecessarily, stress caused.

Being able to plan your mortgage, your insurance and even towards your retirement planning, will help you both focus on the same financial targets, with a far higher chance of success.

Samuel Rosenberg is the founder and CEO of Axcel Finance Ltd., the leading regional microfinance institution. Share your thoughts and email your questions to srosenberg@axcelfinance.com

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