Financial Checklist for Newlyweds
Begin Your Journey Together on Solid Financial Ground
First, let me say congratulations on your recent or upcoming marriage! This checklist is to provide guidance for couples who’ve recently tied the knot or plan to do so soon. Eventually, the subject of personal finances will need to be discussed.
Having open financial discussions, planning and goal setting together can help you avoid some of the financial stresses that befall many marriages. Financial woes are contributed as a top three causes of divorce in America according to the Institute for Divorce Financial Analysis.
Here are some items I recommend discussing and planning together with your spouse in the early phases of your marriage.
Analyze Household Budget
Take the time to review your combined income and expenses and understand your monthly cash flow. How much net income will you bring in each month? How much will you spend on items like rent or mortgage payments, food expenses, transportation, etc? Try to be as specific as possible. Include items like tithing or projected entertainment expenses as well. Early on the goal should be to ensure that your projected expenses fall considerably lower than your projected income. The reason for this is you’ll want to start savings plan which will discuss a bit later.
Discuss Spending Strategies
Take inventory of your combined assets. Look at everything from cookware, furniture, automobiles, etc. Are there items needed right away? Are there items that you can live without for awhile as you take care of more pressing needs?
The goal here is to set up a list that gives priority based on your needs and wants. Focus on your needs first and attempt to avoid purchasing on credit by using cash only. This can have a tremendously positive near and long-term impact on your financial picture by helping avoid mounting credit card debt and interest rate fees.
Create a Debt Repayment Plan
Newlyweds often have debt that was accrued prior to marriage. Perhaps this is unsecured debt like credit card, medical, or collection debt? You should also look at secured debt types such as mortgage or auto loan debt. When reviewing each other’s debt take a look at how much each particular debt costs in terms of monthly payments and interest rates and try to create an order of prioritization in regards to which debt to tackle first.
High interest and high balance credit card debt is important but also look at any collection debt as it’s important to avoid garnishments or judgments. By working out a debt repayment plan early on you can likely bolster your credit scores and help make major purchase like a home or automobile more affordable in the future.
Call a certified nonprofit Credit Counseling service to help you with this step if you feel overwhelmed and unable to determine a good plan of action in resolving premarital debt. Credit Counselors are available to help you create realistic household budgets including spending plans. These consultations are free. You can call 1-866-688-3328 to speak with a Credit Counselor and set up an appointment. If guidance from a Credit Counselor is sought I recommend couples to attend the consultation together.
Layoffs, injuries, vehicle breakdowns and other financial hardship items can really take a bite out of your finances. Early on your goal should be to have six months of emergency savings available in order to get through any financial hardship without relying on credit and to soften the blow.
While six months of income stocked away in your savings account may seem to be a daunting task remember that early in your marriage you may find that after repaying your debt and balancing your household budget you can only save five percent of your net income. That’s okay because as you pay previous debt or acquire your needs as described above this should create enough room for you to incrementally increase your savings amount. The bottom line is at the end of the day if you are saving money each month you are making progress and that should bode well for your financial health in the future.
Update or Creating Insurance Benefits and Wills
It’s important for the financial security of you and your partner to review your insurance coverage. Adjust your coverage amounts if needed and make sure you change your beneficiary designation to your spouse. Also, now is a good time to look at each of you creating a will or if you’ve already done so make sure you review your beneficiaries and make appropriate adjustments.
By following these tips you can start your marriage off on a strong financial footing by reducing money related stresses. This list should give you some good starting areas to look into.
Again, if you have additional questions or would like one of our Certified Credit Counselors to assist you in developing a monthly household budget and spending plan give Debt Reduction Services a call at 1-866-688-3328 or fill out a contact request at www.debtreductionservices.org.
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