The moment a couple says “I do,” a lot changes. Newlyweds begin an emotional and fiscal partnership meant to endure for the rest of their lives. To start off on the right foot, they should recognize their financial partnership by establishing monetary goals, expectations, and plans together. The following are some tips from financial advisors worth considering.
The Challenge of Two Incomes
Although it’s a pretty uncommon that two people can live as cheaply as one, they can still save money on rent, groceries, and shared transportation. Leftover income may create temptations like a bigger car, new clothes, travel, and more. Resisting the urge to overspend and applying this surplus to paying down any debt or saving, is a more prudent option. This cash can be considered a family’s “working capital” to cover special needs that may arise.
Budget for the Future
If both husband and wife are working, try to budget on one person’s salary and bank the other. In the years to come, one or the other may decide to change careers, go back to school, start a new business. If and when they start a family, one may want to stay home for a few years.
Consider future retirement plans. Though retirement may seem like a long way off, the earlier a couple considers their options, the better. Financial advisors can help newlyweds to understand their fiscal situations and help create a long-term plan for the future.
Contribute as much as possible to a tax-deferred 401(k) or 403(b) to maximize the employer’s matching contributions. Do the same for individual Roth IRAs and retirement accounts. Newlyweds should also consider separate accounts. The goal of retirement savings should be annual savings of at least 10 percent of gross income each year.
Catastrophic Health and Disability
Financial advisors suggest that newlyweds consider some coverage for the possibility of unexpected health or long-term disability and subsequent loss of income. Couples may want to begin to consider life insurance policies too.
Newlyweds may experience some financial highs and lows on their journey together, but careful financial planning can help along the way.