7 Financial Tips for Newly Married Couples
Young Married Couple Financial Tips
Marriage is a union in many ways. You may have the emotional aspects covered, but what about making the dollars and cents work? Financial tension is a big reason that many marriages fail. Read our seven financial tips for newly married couples to hear some tips for starting off on the right foot.
#1 Have the hard conversations
Why is it so hard to talk about money? Because of the feelings and assumptions that go along with it.
For example, you may have been raised to believe that high earning people are more successful than those who don’t make as much. You don’t want to confront anyone about this, or even worse, be confronted about your own level of earnings. Or, maybe you are harboring a feeling of shame because you spent more money than you should have on something.
The list goes on and on…
Talking about money with your partner may feel awkward at first, but wealth is built on a foundation of open communication between couples. As your life together unfolds, you’ll likely encounter a number of problematic situations involving money. Get in the habit now of having those hard talks because, just like you lift weights to build muscle, this is a very powerful skill for you to have as a couple when you need the strength.
#2 Learn how to compromise
We recently worked with a young couple who initially had very different views on spending and saving. However, with our help they were able to compromise and come together on a plan for their finances.
It is common for couples to have different attitudes toward money considering they could come from very different family backgrounds. You may require a third party to help you bridge the gap at first. Compromise isn’t easy but you can learn how to reach it as a couple with hard work and commitment.
#3 Protect yourself
In cases where you will just never see eye to eye on finances or where vast differences prevail, perhaps a prenuptial agreement is needed. There’s nothing wrong with having the conversation. Consult a professional to learn about what this entails before you tie the knot!
#4 Start planning now
Plan for the future from the beginning – It’s never too early to start! As soon as couples start planning their lives together, finances should be on the agenda.
Ask each other questions about income level, career goals, saving habits and current liabilities, as well as short-term and long-term goals. Discuss whether to have joint or separate bank accounts going forward.
Family planning, or the question of whether or not to have kids, is an important question as well. If the answer is yes, discuss how care will be provided to the children and what the financial implications may be. Start familiarizing yourself with California short term disability payments and family leave provisions. If this is an immediate priority, consider which health insurance plan would be right for your needs during open enrollment season in the fall.
Make your planning a regular part of your life together. We recommend young families to hold a regular financial touch-base meeting to go over their checklist items. Some examples are:
Updating emergency contacts
Tax withholdings
Health care benefits
Wills
Retirement plan beneficiaries review
Life insurance overage
Investment account review
#5 Know the perks that marriage brings
There are financial benefits that favor those who are married such as tax savings, spousal IRAs, spousal benefits through work, and social security benefits. There also may be some estate planning and inheritance benefits.
Be aware and take as much of an advantage of these as possible!
#6 Get a debt reduction plan in place
Debt can put a huge strain on a marriage. Get a plan in place. One useful tip is to pay off higher interest debt first. For example, if your car loan’s interest rate is 4% while your credit card is charging 12%, it makes sense to pay off the card first.
#7 Start saving!
A couple that saves together, stays together! Right?
Well not necessarily…but it can’t hurt.
Aim to save at least 20% of your income. This may be a challenge, but consider setting up automatic deductions from your bank account to make it easier. Think about taking full advantage of company retirement plans that might offer matching money (e.g. “company match”). If possible, it is a good idea to set aside savings for 3-6 months of expenses as a cushion in case of job loss or emergencies.
Summary of financial tips for newly married couples
Marriage brings many changes. If approached correctly it can be a time of great financial growth and maturity for your family. If you’d like to learn more about strategies for making this happen for you, please contact us.