(photo credit: INGIMAGE / ASAP)
Hopefully the smoke from all the Lag Ba’omer bonfires has cleared – because now it’s time for wedding season.
Much to my chagrin, while much time is spent counseling soon-to-be married couples on how to be a good spouse, family purity laws and what the color theme of the wedding will be, the one issue that is usually forgotten is teaching them about money matters. Isn’t it rather ironic that one of the biggest causes of divorce is due to financial issues, yet we spend virtually no time counseling young couples with their finances? More often than not, young newlyweds have very little, if any, experience managing financial issues. After the wedding, they are plunged into a new world, where there is a household to run and finances to take care of. As this can be a very daunting task, here are four tips on how getting a marriage started off on the right foot financially.
Get organized Make a list of all income, assets, and debts – including credit cards and loans that you each bring into the marriage.
Get all your accounts updated, especially if there is a name change involved. Don’t wait until you are about to make a trip and then have to scramble to change the name on your passport. Same goes for adding names to bank accounts, changing names on credit cards, driver’s license and national security. You will also need to name your spouse as beneficiary on certain investment accounts.
Budget Start keeping track of all money spent and earned. When two people who have been living independently suddenly become one unit, spending can spin out of control as each spouse continues to spend on what they are used to, blind to their new reality. In many cases, certain expenses will shrink as spending for two is more costly then expenses for a married couple. Make sure that monthly and annual expenses do not exceed income to avoid getting into an overdraft situation.
This is a golden opportunity for the newlyweds to start off their marriage by living within their means. If good financial habits are reinforced at an early stage, they are much more likely to become habitual and the couple will live in a financially responsible manner, and avoid the pitfalls of financial mismanagement that plague so much of society.
Financial vision While the couple was dating, they spoke philosophically about politics, religion and how they plan on educating children. The one issue left out – money. If the man was used to spending his salary every month on clothes, cable TV and tickets to sporting events, while the woman spent her salary on shoes and weekend getaways to Europe with her friends (I apologize for the stereotyping!), the couple has to now come together and figure out what their short-, medium- and long-term goals are and figure out a way to pay for them. It is no longer acceptable to frivolously spend all money that is earned. After all, you will want to take a vacation, buy an apartment etc. And these things need to be funded.
Kelley Keehn, personal finance expert said, “If you’re going to achieve something financially different from what you and your spouse have now, you both must determine what changes will be. Will either of you be giving up something to fast-track saving for the down payment of your first house? Or giving up buying your lunch at work in exchange for a beach holiday next year? Perhaps one spouse is willing to work overtime while the other goes back for a master’s degree. This step may take weeks or even months but revisit this area often, even if it’s just a short conversation about your progress thus far or to reset time frames and priorities.”
Too many couples keep secrets when it comes to their financial history. Be open with each other and save a lot of heartache.
Start saving As soon as possible, a new couple should start a disciplined monthly/annual savings plan. It is a good idea to use some of the wedding money for this purpose. Many couples receive a substantial amount of money as wedding gifts, and investing this money wisely can help them get on the path to financial security. If a couple starts saving immediately, it makes future expenses much easier to deal with.The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc., or its affiliates.
email@example.com Aaron Katsman is a licensed financial professional in Israel and the United States who helps people with US investment accounts. He is the author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing.