Getting married is a big life commitment, both emotionally and financially. It is essential to begin building a secure financial future from the get go. Unfortunately, the financial aspect of married life is overlooked until big life events happen, like buying your first home or adding a new member to your family.
Newlyweds need to plan finances early on, and together, to avoid future financial stress. Then after the honeymoon phase is over, check in on those financial plans often to ensure that you are still meeting those short-term and long-term goals.
To help in securing your future during one of the most exciting and important stages in life, we compiled 15 financial planning tips for newlyweds. Let’s jump right in!
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1. Get on the Same Financial Page
You and your significant other need to have a conversation about finances. This conversation may have taken place prior to wedding bells ringing, but if it didn’t, it’s time to sit down and talk finances.
A few important details to discuss are:
- Debt (Student Loans, Credit Cards)
- Joint Accounts
- Spending Habits
- Future Financial Goals
It is not uncommon to have a husband or wife with different views when it comes to money. Opposites attract, and when it comes to newlyweds, getting on the same page about finances is vital.
2. Talk Budget
Budgets are certainly the last thing on your mind while planning for your wedding, enjoying the honeymoon, and looking at your first home together as newlyweds. However, talking about and setting a budget is important for your financial future.
In fact, only 41 percent of Americans actually have a budget in place. This is alarming, since 70 percent of Americans have only $1,000 or less in savings. This makes budgeting a discussion that needs to happen, especially for newlyweds.
Putting a budget down on paper that you and your partner can agree on allows you to save for the future. This saving can help you meet many of your short and long-term goals, like buying a home for instance.
Your budget should include these five elements:
- Calculate your household expenses as newlyweds
- Add up both salaries to get a clear picture of income
- Set savings goals, as well as debt payment goals
- Keep a record of spending
- Analyze your budget and track progress
No one budget is precise and works forever. There are always unexpected expenses that can pop up that you and your partner will need to adjust for. Just be sure to revisit your budget and ensure it is working, and meeting your financial goals.
3. Start Setting Goals
You and your partner have made a big leap in life. Chances are you have some goals in common, so organize them and put a plan of action in place to achieve them. Goals are a great way to be financially healthy, and set both short-term and long-term goals.
For instance, if you want to purchase a home within five years of your wedding day, what financial goals do you need in place to do this? A short-term goal could be saving enough for the down payment of a home in your price range. A long-term goal could be a financial plan to pay that new home off faster.
You can also apply short and long-term goals to future college savings plans for your children, or even an early retirement plan. Sitting down and putting goals on paper is a must for newlyweds.
4. Eliminate Household Debt
Most people have some sort of personal debt. However, when you get married, that debt becomes household debt. It is very important for newlyweds to eliminate this household debt quickly.
This household debt can be student loans, previous car loans, credit card debt, and even home debt. To eliminate this debt, plan to pay off the largest debt amount first. For example, it is common to dedicate 20 percent of your household income toward larger debt amounts, like credit card or student loan debt.
However, ensure you are still saving money to achieve your short-term and long-term goals too. You’ll also want to have an emergency fund growing as well.
5. Have an Emergency Fund
Emergency funds are important for anyone, but even more important for newlyweds. From a hospital stay to a vehicle repair, an emergency fund can help you cover unexpected expenses.
By covering these unexpected expenses with an emergency fund, you can keep your saving intact, keep your budget on track, and not fall into debt. This can make a big impact on your future financial situation.
For instance, a five-day hospital stay can cost up to $10,000. That could be a down payment on a home. In fact, more than 60 percent of bankruptcies are due to medical costs.
6. Make Smart Investments
The term “investing in your future” is not just a silly term people use to get you thinking about the future. Newlyweds should absolutely think about making investments. By investing, you and your partner are building long-term wealth.
Here is another financial space where goals should be considered. And don’t get too hung up on stocks either. Many experts are saying that mutual funds and ETFs are better than traditional stock investing.
It is also imperative to keep your mid-life goals in mind as well. Don’t throw all your cash into your retirement fund without enough to buy a home, raise children, or start a business. Be sure to spread that newlywed money around in smart ways.
7. Learn About Marriage and Taxes
Marriage and taxes is a topic that doesn’t come up very often for newlyweds. However, it is an important to consider, and could potentially save couples thousands of dollars. Being newlyweds, you and your partner will need to review tax withholdings and examine ways to decrease taxable income while increasing savings.
A few areas and forms to look over again are:
- W-4 Tax Form
- Employee’s Withholding Allowance Certificate
- W-2 Withholdings Allowances
- Life Insurance Policy
- 401k Plans
For instance, you can rack up higher interest on 401k plans, which are not taxable. This is a great way to funnel your salaries to a savings plan without the federal and state government getting their slice of your earnings.
8. Plan for the Worst
This may seem odd to say when discussing planning tips for newlyweds, but it is very important to do. Life happens, and you want to make sure you or your partner are covered and have enough cash stability in the event of a disability or death.
Life Insurance and disability insurance is a good way to ensure your loved one is covered if the worst happens. For instance, if you are living paycheck to paycheck on two household incomes, how will one of you survive if the other passes away or becomes disabled, and cannot work?
This is what makes life insurance and disability insurance vital to securing a financially stable future. Many employers will have life insurance and disability insurance plans available with health plans.
You can also find your own plan online or through a friend or family recommendation. Planning for the worst is important, and it also brings up the topic of having a will in place.
9. Draft a Will
Drafting a will is one of the most important things newlyweds can do to protect one another’s future financial security. It is the direction, the wishes, and the guidelines you want to happen in the event you pass away.
Without a will, things can often get messy, especially for newlyweds. For instance, the parents of your partner may not think you are as entitled to his or her finances since you are a new addition to the family.
If you do have a will, you should update it as soon as possible to include your partner after you pass away.
10. Who’s Paying the Bills?
Another important financial tip for newlyweds is deciding who will oversee paying the bills. Not so much as paying them with the bride or groom’s income, but who’s going to be the one tracking and issuing payments.
This can be a tough one, but normally the one who is more financially sound is the best choice. This responsibility includes, setting up automatic payments, tracking payments, balancing the household accounts, and more.
It is, however, not solely on the shoulders of the one tracking and paying the bills. Newlyweds should hold semi-monthly or monthly meetings to discuss how finances are going, and look at how the short-term and long-term goals are moving along.
11. Designate Power of Attorney
This is another one of those financial planning tips that isn’t the most upbeat. However, getting a power of attorney set up for each other is important to secure financials and make financial decisions down the road.
If something happens to you, a power of attorney allows your partner to make legal and financial decisions if you become unable to do so. Normally, the power of attorney becomes useful during an illness or severe medical issue.
You can also set up durable power of attorney for health care to allow your partner to make medical decisions on your behalf during an illness. This will go hand-in-hand, and it’s a vital part of becoming newlyweds.
12. Discuss Spending Limits
Discussing spending limits and having a maximum spending number is another essential element to keeping financial stress out of the newlywed equation. In fact, the number one catalyst for financial conflict in a relationship is overspending.
This can be a tricky subject to discuss if you and your spouse have different spending traits. For instance, if your partner likes more expensive items, he or she may be more inclined to spend more, and without having a conversation with you about it.
Set the guidelines for what both you and your spouse can spend without having a family discussion about the purchase. This could be a $200 cap on big purchases. Anything over $200 would require a sit down.
13. Consolidate Monthly Expenses
One of the best parts of being a newlywed is that they are now partners in everything. This is great, since you can consolidate a lot of monthly expenses. For example, Netflix or Amazon Prime accounts can be grouped together as a family account. That could save $25 a month.
You can also shave off monthly fees from checking accounts by opening a joint account. Depending on the type of account you have, this could save quite a bit of monthly cash.
14. Stay Organized
To really keep financials in order, newlyweds need to stay highly organized. Be sure to keep receipts, print bank statements, hold onto bills and pay stubs, and more. Once you have all your paperwork, keep it organized.
This will make tracking the household budget and the progress of your short-term and long-term goals easier. You can file all your financial documents in separate folders, as well as scan them to ensure you always have a digital copy.
15. Know When to Get Help
From changing life insurance policies to discussing financial goals, there are a lot of financial things newlyweds need to do. Staying on top of your finances is very important, and if it becomes too overwhelming, don’t be afraid to get professional help.
You can enlist the help of a financial planner or an accountant to ensure you are making the right decisions for you and your partner’s future. Professionals can serve as a buffer too, laying down guidelines and keeping financial stress out of the home.
Bonus: 5 Apps to Make Financial Planning Easy for Newlyweds
Financial planning apps are great at helping newlyweds track finances, stay on budget, and achieve those short-term and long-term financial goals. The following are our favorite financial apps that may be useful.
- Wally: Wally is an all-in-one budget app that allows users to set savings goals, budgets, and track income. You can also keep an eye on expenses to ensure you are on target for achieving those financial goals.
- Wallet: The Wallet app automatically syncs your bank accounts so you can see all your balances, expenses, and transaction in one place. It also includes metrics for insight into your spending.
- Fudget: Fudget is a financial app that emphasizes simplicity. Users can easily add expenses, income, and transactions on a single easy to use dashboard.
- Spendee: This financial app also has a user-friendly interface that lets users track their budgets. Spendee also gives users a clear picture of expenses and also take photos of receipts and upload them.
- Dollarbird: Dollarbird is all about organization, giving users a calendar view of their expenses, and income. This financial, budgeting app is also powered by artificial intelligence (AI).
There are a variety of ways for newlyweds to be proactive when it comes to their financial future. From setting an agreed upon budget to having spending limits in place for big purchases, communication and planning is essential. Beginning a life together should be exciting and full of joy, so take financial stress out of the equation with the above tips and apps.
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