Newlywed Financial Planning
Four Financial Vows Every Newlywed Should Take
Now that you’ve tied the knot, it’s time to sit down and have an open and honest conversation with your spouse about your financial future. Whether it’s opening joint checking and savings accounts, day-to-day budgeting, managing debt, or saving for your dream house, don’t let newlywed financial planning take the romance out of your marriage. Below are some strategies for successful budgeting. No matter how you plan on handling your finances as a couple, these tips will help you reach a financial happily ever after
1. Combine financial forces
If you’ve been single and living on your own, getting married offers a great opportunity to share expenses and save. Even if you’re not planning on merging all of your finances, opening at least one joint checking or savings account and combining your expenses can save you a lot of money.
In 2011, the U.S. Census Bureau reported that over half (54 percent) of couples earned a dual income. With more and more partners both working, it may make sense for each spouse to contribute a set amount of their income to a joint checking or joint savings account. If both of you are working and can live on one paycheck, the additional income can be used to cover extra expenses, pay down debt, save and invest, or put a down payment on a house, boat or other asset. Joint checking and savings accounts ensure you both have easy access to funds and you can always choose to retain your own account to have some place to hide savings for purchases like anniversary gifts!
You may also want to combine mobile phone plans, auto insurance policies and health care plans. If one spouse has better health insurance coverage through their work, you can add your partner to your policy. And, many cell phone carriers offer discounts on family plans. By merging some of these accounts, you can both save hundreds a month.
2. Agree on a budget, together
Successful newlywed financial planning can take some compromise. Not every couple agrees on how much they should spend. In fact, over 90 percent of couples admit that they argue over their budget, so it’s important to come up with a financial plan you can both live with.
Many newlyweds find themselves with a cash flow surplus after combing key accounts and expenses. The trick is not to be tempted to burn through the extra cash on luxuries. We recommend addressing your expenses in order of necessity. Take care of your basic living expenses first, then pay down debt and contribute to your emergency savings account, nest egg, retirement plans, and other investments.
Remember, no budget is etched in stone. As life changes and time goes on, so can your financial situation. So, it’s important to remain flexible and discuss changes in your budget with your spouse openly and honestly.
3. Pay down debt
Did you know that according to the Center of Marriage and Family, debt brought into a marriage is the number one problem area for newlyweds? It’s no wonder, since most couples (67 percent of women and 74 percent of men) go into a marriage with some debt. With the average age of newlyweds now approaching 30, individuals may carry more financial baggage to their marriage.
If one or both of you have substantial debt, come up with a debt repayment plan that fits your budget. Take into account both of your debts from student loans, auto loans, credit cards, medical bills, etc. and contribute as much as you both can to pay them down quickly. Remember, while debt is stressful, if you both tackle it as a team, you may be able to eliminate it faster.
4. Commit to a common financial vision for the future
People get lost in the minutia of day-to-day expenses and forget to budget for the larger financial goals in life. From having a baby or taking a family vacation to building your dream house or funding your children’s education, there are so many wonderful experiences ahead of you, but most of them require a little saving.
That’s why making a commitment as a couple to contribute to a savings account, money market account, nest egg, college savings, and/or retirement plan is so important. Whatever your dream or financial objectives, by pursuing your newlywed savings goals as a team, you can make your version of happily ever after come true.
Sponsored content was created and provided by RBS Citizens Financial Group.