The ceremony and honeymoon are over and reality has now set in. You are living together as one and both of you will need to make some adjustments. This is especially true of money and debts that both of you have incurred prior to your marriage. This article will provide you with some tips on how to begin the process in making your marriage last, being prosperous and taking control of your finances.
Begin With The Basics
Create a household budget and stick to it!
Pay down any debt accrued before you got married.
Start saving for our future together.
Plan for the unexpected.
As a couple, create a total financial game plan.
This step requires patience and persistence. Sit down together and begin to formulate your plan. There are tools that you can use to assist you in budget planning. The sooner you do this the better chance you have of not fighting over finances as a couple. SmartMoney indicated this is the biggest problem facing married couples.
Some Tips to Consider
Update your will if you have one. If not, make one.
Update your life insurance policy if you have one. If not, buy a term life insurance policy that covers the entire family including children.
Update your medical power of attorney.
Decide on guardians for your children.
Suggested Budget Plan
35% Housing - includes mortgage or rent, utilities, insurance, taxes and home maintenance.
20% Transportation - includes car payments, auto insurance, tag or licenses, maintenance, gasoline, parking, tolls and transit.
15% Debt - includes student loans, retail installment contracts, credit cards, personal loans, tax debts and medical debts.
20% Other - includes all other expenses: food, clothing, entertainment, childcare, medical expenses and charity.
10% Savings - save at least 10% of your income throughout your working years. Pay yourself first!
Keeping finances separate or in a joint bank accounts is a matter of personal preference. But, whatever you decide, do not forget to communicate! This should be done on a regular basis.
Do's and Don'ts
Do break bad debt habits (90 million households carry credit cards, with an average debt load of more than $10,500 (USA Today, March 22, 2009.)
Do not delay in paying off credit cards completely. (The average household pays about $1,000 in credit card interest a year. (The Atlanta Journal-Constitution, January 18, 2004)
Do communicate honestly about your spending habits.
Do not abuse your credit.
Do communicate on a regular basis converting the household finances. This cannot be stressed enough.
Save For A Rainy Day
Starting a family or retiring from your job might seem like a long way off, but it pays to start planning early. Saving and investing is an essential part of your financial game plan. This means more than just putting a few dollars into a savings account. Here are some suggested areas of saving:
Emergencies: According to a recent survey, only 28% of households said they have enough money saved to weather a financial difficulty. (Money, April 2004). If you have to make a home repair, pay for an unexpected injury or supplement a spouse's income due to unemployment, you need to have some cash on hand. A good goal to shoot for is to have enough for at least 3 months of core expenses.
Short Term Goals: Maybe you are dreaming of a summer vacation, new appliances for your home or another big-ticket purchase. Save up for things. It is better to pay cash than getting locked into high interest credit card debt.
Children's Education: If you plan to start a family, it is a good idea to think about education. With annual tuition at a 4-year public university topping $8,000, starting early can make a big difference. Determine if you plan on paying all or part of this expense. Inform your children how much they will be paying for before they start there first college course.
Retirement: If you are among those who have not saved a dime for retirement, starting now will pay big dividends later. You need to start saving and investing now. Social Security checks will not cover all of your basic retirement needs. You will have to supplement Social Security with additional retirement funds. The average Social Security check for individuals was $1,079 and $1,761 for couples as of 2008.
Plan For Tomorrow...Today
No one wants to think about tragedy or loss, but you should discuss with your spouse a game plan if something unexpected should happen to either of you. Nothing can replace the loss of a spouse. A term life insurance policy protects your family if something should happen. Depending upon your expenses, if you have children, a policy that covers between 6 and 10 times your income should be enough. (MoneyCNN.com, August 4, 2003).
In addition to the life insurance policy, it is important to talk about each other's wishes if one should die. Discuss burial site, to be cremated or not, and a will covering the distribution of your assets and care of your children.
Next Steps
What has been presented seems like a monumental task for you to think about. It is not that hard. You will need to focus on your situation. Every married couple is unique and their finances are no exception. Good luck! May your marriage be successful and prosperous.