5 Financial Tips For Newlyweds
Newlyweds are just getting started on their happily ever after, and there is one way to make it feasible. That’s by taking control of the budget and making it work for them rather than making them work for the budget. Financial issues are one of the leading causes of marital strife and divorce, and most newlyweds have the opportunity to pull ahead of the game and take control of their financial situation from day one. It’s imperative couples speak openly and honestly with one another regarding their debts, financial views, and hopes and dreams before getting married. However, it’s not too late for newlyweds to start off on the right foot even after the marriage.
Live Off One Income And Save the Other
One of the best things a couple can do is live off one income and save the other. Imagine life after putting an entire income into savings while living comfortably off the other. It’s free, fulfilling, and it allows couples to take control of their finances. However, before a couple can do this, they must first pay off all their debts. If they have credit card debt, they should use their secondary income to pay it all off. Once there is no more debt in the marriage, couples can create a budget that allows them to live off of one income while the other is allocated toward their savings accounts. This can include saving for emergencies, vacations, retirement, a house, college for future children, or it can even go into a savings account the couple doesn’t know what they want to do with, as long as it’s being saved.
Continue reading to learn about the tip related to retirement all couples should consider.
Individual Retirement Plans
Individual retirement plans are a great idea for any newlywed couple. It’s the kind of plan that allows couples to add to their retirement savings on their own, and it’s also considered nontaxable income. Not only does opening an IRA allows couples to contribute more toward their own retirement, but it also minimizes their taxable income for a big tax break, which is akin to double the savings. The benefit of an IRA is individuals get to choose where their money goes, how it’s allocated, and what they want to do with it. It’s not an employer-based savings account, and it’s not something anyone else controls. Couples are in charge of their own IRAs, which gives them the chance to take more risks when they are younger while becoming more conservative as they reach retirement age. Planning for retirement is one thing no one can afford to wait on, and the earlier a person begins saving for retirement, the more successful they are in the future. It’s not something individuals should put off or assume they have more time to do. The time to start is now.
It's always smart to keep the possibility of emergencies in mind. Learn more about this now.
Hope For The Best, Prepare For The Worst
Everyone should have a 'hope for the best, prepare for the worst'. An emergency fund is used to prepare for the unexpected. Perhaps the car blew an expensive tire, and it suddenly needs four new ones. Perhaps someone is ill, and the family must travel to another state unexpectedly to make one final visit before their family member passes. Perhaps the roof is leaking and needs repair. Things happen all the time with little to no warning, and it’s imperative families have the money to handle these situations. The best way to start an emergency fund is to place one thousand dollars into an account and never let it go below this amount. That said, it’s better if families continue to add to the account, so it then contains three months of living expenses, followed by six months of living expenses. Ideally, this account should always contain at least a year of living expenses if the worst should happen.
Continue reading to learn about the debate between joint and individual bank accounts.
Joint Versus Individual Bank Accounts
Joint versus individual bank accounts is where many couples disagree with their financial planning. Some couples swear by joint bank accounts, and others claim having a mixture of both is the best course of action. It could work either way, but the main goal is for couples figure out whether they want to keep their money in joint accounts or separate. The answer is not wrong or right depending on their preferences and desires. However, many are open to having a joint bank account in which they both deposit family money. This is the money that pays the bills, goes into savings, and cares for their family. They can then keep the rest of their money in a joint account intended for fun, or they can keep it in individual accounts and spend it how they see fit. This is a very personal decision, but it can make the budgeting aspect of a household easier if both parties have their own accounts to use as they see fit.
Continue reading to learn about the importance of setting financial goals as a couple.
Set Financial Goals
Every newlywed couple needs to set financial goals. Financial goals are not just pipe dreams people use when they are daydreaming about the future. Rather, these are the goals set to help them get on track with their personal financial needs. Couples must sit down together and talk about how they want to pay for their lives, what they want in life, and how they see the future. Perhaps a couple would like to help their kids go to college or retire and live on the beach, or build their dream home by the time they reach thirty-five years old. Every couple has their own idea of financial goals, but all couples should get on the same page with their financial goals and work towards them together. Setting goals allow couples the chance to break those main goals into smaller goals, save for them, and keep them motivated to live a financially successful life.