After the wedding excitement dies down, most newlyweds take the time to transition into their new lifestyle. One of the hardest decisions is how to manage finances. Communicating with your spouse about your finances reduces conflicts in your marriage. Budgeting tips can help you make the most of your lifestyle choices. Below are some budgeting tips for newlyweds.
Buying vs Renting
Your finances determine the amount of money you will be able to budget for a house. Whether you are renting or owning a home, it is essential to consider your gross income before deciding on the percentage. For renters, it is advisable to spend less than 30% of income on house costs. For a mortgage, check the monthly payments to know your payment capabilities.
When setting financial goals, highlight the long-term and short-term goals. The short-term goals can include the monthly budget. This plan helps you have limited spending. The budget should include your expenses and all income. You can revise the budget from time to time when adjustment is required. The long-term financial goals include the amount of money you will be saving for retirement, education, and large purchases. Open a joint account and decide the amount to save to meet these goals. You can set 10 to 15% of your income for the savings.
Discuss your debts with your spouse openly. It will help you plan on payments. For example, recurring monthly debt such as car loan payment, student loans, minimum credit payment, and others needs to be paid monthly. If you have a lot of debts, consider ways that can lower the debt to income ratio. For example, you can pay down debt and refinance your existing loans to lower your monthly obligations. You can also pick up another job or work overtime.
Sticking to The Budget
Setting a budget is one step, but it’s another to stick to it. Most people develop a budget and forget to review it when making financial decisions. Stick to your account by spending less, even if income increases. It’s ok to readjust your budget but keep it practical. Before buying, ask yourself whether the item is a need or a want. With this in mind, you will be mindful of your spending.