Not long after you walk down the aisle and say, your “I do’s,” reality will likely set in. Now that you are married, you are going to be living together, sharing expenses, and sharing your assets. For many newlyweds, navigating through the finances can be a bit tricky. Some even find it to be overwhelming. If you want to avoid arguments due to finances, CFP Mary Nosuchinsky of Stash Wealth has some great advice. These newlywed finance tips can be beneficial for couples.
#1 First Things First
The first thing that should happen after marriage is a conversation about finances. If possible, this conversation should occur before you walk down the aisle. It is a good idea to be aware of your financial situation and not to be afraid of it. You and your spouse should understand what each is bringing into the marriage, whether it is good or bad. This means discussing your salaries, your savings, your debt, and your spending habits. You should also talk about your parents’ financial situation while you were growing up. This can have a lot to do with each of your spending habits and how you view money. Since opposites attract, it is not uncommon to have a saver and a spender getting married. This is why it is so important to talk about money before saying “I do.” If you wait too long to have the conversation, you could be putting your marriage at risk.
#2 Set a Budget
Creating a budget is never fun. However, it is necessary after you get married. The budget that you create would depend on what you are saving for. Are you trying to save for the future or are you trying to save for something within the next few years? Most people don’t track their expenses down to the dollar. However, this is important. If possible, use a credit card that offers rewards or miles for each purchase. This will also help to build your credit. You should also figure out how much you can put on each card each month so that you can repay the entire balance when you get the bill.
#3 Set Goals
A great way to remain financially healthy is to set short term and long term financial goals. When thinking of short-term goals, you should decide if you want to take a trip, move to a more beautiful apartment, buy a home, or start a family. When setting your goal, you should create a separate bank account just for your short-term savings. This is the best way to achieve your goal.
Long-term financial planning is anything over two years into the future. Do you want to send your kids to private school? Do you want to send them to college? Are you hoping to buy a vacation home or retire at 50? Each of these is long-term goals, and it is where you need to start investing your money. Since these goals are not necessary for years, let your money work for you.
#4 Deal With Debt
Most people are in debt to some degree, as much as they hate it. Any debt that is brought into the marriage is considered household debt. If you or your spouse brought student loan debt or credit card debt into the marriage, you should use household resources to pay for it. When paying down debt, you should start with the one with the highest interest rate. If possible, try refinancing to get a lower interest rate. When paying down this debt, it shouldn’t be the only thing that you focus on. You should still be putting money aside for emergencies, for a down payment on a home, and for a bit of fun. Everything doesn’t have to be about paying off your debt. As a rule, set aside 20 per cent of your monthly take-home pay towards your debt.
Before deciding to invest, you should decide what will be best for you. Investing just to invest in gambling, and it won’t help you gain wealth. When investing, keep your goals in mind. Single stock picking is a bad idea. While this may have worked when your parents are young, there are plenty of safer and more effective ways to invest such as mutual funds and ETF’s. While putting some money on red at the roulette table may sound fun, it isn’t the best way to become wealthy.
You should also be careful not to invest too much or not to over-fund your retirement fund. Many couples make this mistake, and they over-fund and max out their workplace retirement plan. This leaves them no money for their other goals such as buying a home or starting a family. Before investing, think about mid-term goals so that you know what you have on hand to invest.