How Newlyweds Can Better Manage Their Money
In the weeks before my wedding, it seemed like I had hundreds of choices left to make—from which flowers I’d carry down the aisle to where everyone would sit at the reception. I was looking forward to it all being finished so my new husband and I could enjoy our wedded bliss. But it turns out there were a ton more decisions waiting for me on the other side of “I do.”
As newlyweds, my husband and I realized that we needed to start planning for our next big adventures, like buying a home, starting a family and enjoying our dream retirement. Laying a foundation for these goals felt overwhelming at first, so we broke them down into individual milestones. Here are some of the lessons we learned along our way:
Get out of the red
Before my husband and I could focus on saving for the things we wanted, we knew we’d have to tackle my least favorite four-letter word: debt. I made it a point to be honest about my financial history before we got married, but we revisited this sticky subject soon after taking our vows.
We set aside a weekend to discuss our finances and drafted a spreadsheet that detailed our respective student loans, credit card debt and bank account balances. This helped us prioritize which debts we wanted to pay off first, while continuing to meet the minimum payments for our other debts. In addition, we created a monthly budget for ourselves with the help of Mint.com—and vowed to stick to it.
Since 36 percent of young couples argue monthly about money, we work hard to communicate about our spending and stay within the limits we set for ourselves. So far, it’s been going pretty well. When I get tempted to add yet another pair of jeans to my collection, I remember the advice my mom gave me the day I got my first job: “You can’t always control how much income you have coming in, but you can control how much is going out.”
Save up for your own space
For a while, the little townhouse we rented right after we got married worked out great, but eventually, we wanted a bigger space for our future family. Once we decided to make the leap to homeownership, we opened a joint savings account dedicated to our down payment and put a portion of our paychecks into that account each month. During months with three pay periods, we directed the “extra” paychecks into this account, along with our tax refunds at the end of the year.
And instead giving us birthday or holiday gifts, we asked our families to make small donations toward our goal. In the end, this strategy worked perfectly for us. After about two years, we had enough for a down payment and used the time we spent saving to figure out exactly what we wanted in a home.
Since we’d like to start a family in the next few years, we didn’t try to buy a house at the top of our current price range. Instead, we took into account what type of mortgage we could afford after paying for things like childcare, larger health and life insurance policies, and school fees.
After all, the USDA’s Cost of Raising A Child calculator estimates that having just one kid could cost us between $14,000 and $17,000 per year from birth to age 17—college tuition not included. Which is why, no matter how far off a baby is in your future, it’s not a bad idea to plan for the bundle of expenses that come with your bundle of joy.
Rest assured with a retirement plan
I’ve always dreamed of retiring early and spending our empty-nester years making memories with our grandchildren and traveling the world. But I know that unless we start setting money aside now, this blissful future could remain a pipe dream.
That’s why my husband and I are diligent about contributing to our employer-sponsored retirement plans. If you’re like us, you may want to consult a financial advisor to determine whether a traditional IRA, Roth IRA or 401(k) is best for you. If your company offers a retirement plan, try to contribute enough to qualify for your employer’s match, otherwise you’ll be walking away from free money. And for additional financial security as you age, it might be worth talking through retirement plans that include disability and long-term care insurance.
Money is never easy to discuss, even with your significant other. But to set yourselves up for success, it’s important to plan for the future as soon as possible. Most fairy tales leave this part out, but I’ve found that once you get smart about savings, you can find yourself one step closer to living happily ever after.
Are you ready for retirement? Head over to Allstate.com to find out.
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