RIZEAPP
How do you go from being two financially unstable singletons to one solid financial team?
How do you build financial freedom without putting your current lifestyle at risk?
How do you set up an airtight financial future for your children?
You guessed it: by having "the talk."
No, not *that* talk. The other one: the financial talk.
It will require some honest conversations, a little bit of research, and a few lifestyle changes.
Not so daunting; this 5 minutes cheat sheet will cover everything you need to get started on the right foot.
So let's stop stalling and dive in, shall we?
1. Schedule a Mutual Family Checkup
The first thing any new family needs to do is schedule a financial checkup.
This means sitting down with your partner and going over your current financial situation and your long-term financial goals.
You'll want to take a close look at your:
-Income
-Assets (property, savings, etc.)
-Debts and expenses
This is also a good time to decide who will be responsible for what bills and expenses. For example, one person may be responsible for the mortgage while the other pays for groceries and utilities.
Yet don't be conclusive at this stage - these things can always be changed later down the road.
2. Understand Your Partner's Debt
Chances are, you and your partner came into the relationship with some form of debt. And that's okay!
Not being transparent about that debt with your partner is not okay. Before you can begin to pay off your debt, you need to understand how much debt there actually is clearly.
Sit down with your partner and go over your debts in detail. This includes the debt amount and the interest rate associated with that debt.
You'll also want to discuss how you plan to repay this debt. Will you use your joint income to pay it off more quickly? Or will you focus on paying down other debts first?
If it's a minor debt, you may take on extra work to pay it off more quickly. However, if it's a large debt (like a mortgage), you'll want to develop a long-term plan to pay it off over time.
3. Save for Joint Financial Goals
One of the first things you should do as a new family starts saving for joint financial goals. This may include a down payment on a house, a new car, or even your child's education.
Start by setting up a savings account you contribute to each month. Then, ensure you automatically transfer a fixed percentage of your income into this account each payday.
If you have debt, you may consider using the debt snowball method to pay off your debts and simultaneously save for your financial goals.
Note: As a new couple, at least 80% of your financial goals should be joint goals. Otherwise, you risk falling into the trap of financial infidelity.
4. Decide Who Will Be the Manager
Once you've gone over your assets and debts, it's time to decide who will manage your finances.
There are a few different models you can use, but the two most common are:
-Both partners manage the finances equally
-One partner manages the finances while the other partner provides input
If you opt for the first model, you'll need to set up a system for tracking your income, expenses, and debts. You may also consider using a budgeting app or software to help you stay on track.
If you opt for the second model, it's important to choose a partner that you trust to manage your finances responsibly. You'll also want to set up a system for tracking your income, expenses, and debts so that you can provide input when needed.
How do you determine whose more suitable for this position?
-Consider who's better with numbers and has a head for budgeting
-Think about who's more organized and can keep track of multiple accounts
-Think about who's less likely to make impulsive purchases
-Consider who's more level-headed in financial decision making
Note: This doesn't rule out either party from all financial decision-making. Both partners should still be involved in all major financial decisions.
5. Discuss Finance as a Healthy Ongoing Conversation
Finance should be considered a healthy ongoing conversation, not a one-time event. You'll want to sit with your partner regularly (daily, weekly, monthly or quarterly) to discuss your finances.
Normalize it.
Before you leave for work, ask how you're taking care of the new bill. When you're making dinner, ask what the plan is for the next week's mortgage payment.
You don't need to go into great detail every time, but this will help keep finances at the forefront of your mind and allow you to make quick decisions when needed.
6. Build a Strong Financial Foundation for Your Kids
One of the best things you can do as a new family is to build a solid financial foundation for your kids. This may include things like:
-Opening up savings account in their name
-Teaching them about budgeting and responsible spending
-Encouraging them to get a part-time job (when they're old enough)
-Helping them to understand the importance of investing in the future
All these things will help your kids develop good financial habits that will serve them well into adulthood.
We've completed a step-by-step guide on teaching your kids about money.
7. Seek Professional Help
If you're struggling to handle your finances, don't be afraid to seek professional help. This may include working with a financial planner or accountant.
A professional can help you develop a budget, create a debt repayment plan, and invest for the future. They can also offer unbiased advice and support when needed.
The bottom line is that there's no shame in seeking professional help regarding your finances. It may be one of the best things you can do for your new family.
Final Thoughts
Starting a new family is an exciting time. But it's also a time when you must be extra careful with your finances.
Following the tips in this article can set you up for financial success as a new family. Just remember to keep communication open, set realistic goals, and seek professional help when needed.
