How much do you budget for your coming wedding?
“It’s the once in a life time event, so it must be the best. You should not be saving on your wedding. You will earn it back.” many say.
The realistic fact is, there are many couples who end up with debts immediately after the wedding, instead of living happily after… and hence, the fights start.
It’s easy to answer to yourself financially when you are single. You earn, you spend. You broke, you borrow. You owe, you pay. However, when you marry, your form a family with your spouse and you are responsible to each other in all aspect of life, including financial commitments.
So where do we start? When do we start? How do we start?
Set up a joint account
When you are in a steady relationship and planning for the next phase, you should start discussing about finances with your partner.
Work out a list of expenses that you will probably incur from the wedding and the immediate expenses after that. For example, cost of wedding ceremony, honeymoon, buying house, renovation, furnitures and paying bills (utility, internet, conservancy charges, etc).
Knowing the sum will allow you to work backwards, how much each of you should save in the joint account to meet these expenses.
Some benefits of setting up the joint account are:
1. It provides a system for both of you to save with discipline and a clear goal in mind.
2. It’ll give you confidence financially when you see the money in the account building up toward the wedding goal.
3. It is a proof of financial commitment towards each other. If your partner cannot commit responsibly and reasonably, maybe you should pause and rethink whether you are taking a step too fast.
“If your partner cannot commit responsibly and reasonably, may be you should pause and rethink whether you are taking a step too fast.”
So should we save equally or fairly? There’s no correct answer for this.
- If both your financial situation are fairly similar, then equal amount may be adopted.
- However, if you have different income or family commitment, then may be you can save according to proportion, but must be agreeable and each party must stay committed to the agreed amount.
Classify items to pay using joint account
Some people would conveniently use the joint account to pay for their personal credit card bills, because they feel that they are spending on the family, but has it been agreed upon before charging to the credit card? Some may say why so calculative as a family. If it happens once in awhile, then no problem.
However, if it happen regularly, then a clear communication is necessary so that there is no guessing and doubting when paying bills.
Lack of communication is also a major factor for family dispute.
To avoid miscommunication, discuss and agreed upon what are the bills to be paid using the joint account. Arrange for Giro payment, or a credit card to pay these bills, and only these bills.
Review Expenses Regularly
Over the years, we tend to sign up for packages and bill them under the joint account. For example, TV program packages for toddlers but our children have already outgrown them, paying for club membership but nobody is using it, etc. Hence, it’s a good practice to review once or twice every year to determine if any unnecessary expenses are incurred.
Joint account should not be used only for expenses. Couple should also look for ways to grow their money in the joint account for long term. Talk to your trusted financial consultant to build a broadly diversified investment portfolio through dollar cost averaging. This investment money will eventually form part of your retirement fund to achieve a desirable lifestyle when both of you retire.
The key to a blissful marriage is to have a healthy family finances. It’s not rocket science. Every family can do it. Start as early as you can before any financial challenges surface and put a toll on the relationship.
If you have already set up a joint accounts for family expenses, share with us how you manage it as a family at the link below: