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Financial Tips for Newlyweds

Financial Tips for Newlyweds

 

Plans of who to invite, plans for the reception, plans for housing, plans for the honeymoon, plans for time off from work – a wedding involves plans upon plans.  It is easily understood why finding time to plan financially is not a priority for newlyweds.  Yet, financial planning is the type of planning that will having very lasting effects.  Financial planning for newlyweds should include:

- Share all the financial news, both the good and the bad.  Do not hide either assets or debt. Many newlyweds are recent college graduates and have a sizable college loan debt.  Combining two debts makes for an even scarier debt level but knowing the issue makes it possible to deal with.

- Share financial goals, memories and habits. Discuss how your parents handled money, how you currently handle money (especially credit cards!) and how you would like to handle money in the future. The first step in achieving a goal is stating it.

 - Set financial goals. Start with an emergency fund to cover three to six months of essential bills then set one- to five-year goals, such as for a down payment or a trip, and finally long-term goals such for education or retirement.

- Create a budget. Add your essential costs — housing, transportation, utilities, groceries — and discretionary spending — gym, shopping, entertainment, etc. If you aren’t sure how much you spend on various categories, track your spending for at least a month.  Most financial experts advise that if you are spending more than 80% of your income, you need to decrease your expenses.  

- Agree on a spending ceiling.  Set a minimum threshold cost for discussing big expenses.  To head off fights about money, agree to discuss any purchases above a set amount.  That limit might be $20, or $100 or $500 depending on your financial situation but agreeing on it beforehand will eliminate many frustrations.  

- Update everything.  Update the beneficiary on your life insurance policies, financial accounts such as IRA or 401(k), checking accounts, savings accounts, power of attorney, health care proxy and of course your will

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