Financial ‘I do’s’ for newly-married’s

One major issue that is often neglected is exactly how the young, inexperienced couple will handle their money.

By AARON KATSMAN
wedding370 (photo credit: Courtesy, Reform Movement )
wedding370
(photo credit: Courtesy, Reform Movement )
Let me start by wishing a big mazel tov to my niece Avital on her recent engagement. With Lag Ba’omer serving as the official opening of wedding season, I’d like to focus on some financial issues that newlyweds will face.
For the new couple, many important decisions need to be made. Where to live, who should do the flowers for the wedding and perhaps the most important decision of them all: The linen patterns! One major issue that is often neglected is exactly how the young, inexperienced couple will handle their money.
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 a few tips on how to live in a financially disciplined manner.
Budget
The first thing is learning how to budget. It is especially important to keep track of each shekel spent and each shekel earned. Writing down each expense in a notebook can be very helpful to understanding what money is being spent on. Make sure that monthly and annual expenses do not exceed income to avoid getting into an overdraft situation – where many problems start.
I do a lot of volunteer work with Mesila, an organization that assists families with financial difficulties, and I have seen many couples that have accumulated as much as $25,000 in debt within six months of their wedding simply from setting up their home.
A newly-married couple should realize that they are just starting out and while it would be nice to achieve the same standard of living as their parents, it probably took their parents years of hard work and saving to get to where they are now. Do not attempt to do it overnight, especially if you are living on a shoestring budget. The moral: live within your means.
Examine spending decisions
Every spending decision that is made can have a crucial effect on staying out of debt. When you were single if you felt like buying a cheese danish and can of Coke, you wouldn’t hesitate about making the purchase. Now you also need to be financially accountable to your spouse and if you are living on a small salary, you need to prioritize expenses.
This is the case whether deciding to buy a new wall unit or whether to pay NIS 15 for a six-minute cab ride when you could walk instead. It is always a good idea to ask yourself if a purchase is necessary.
When shopping, make a list of what you actually need before you go to prevent yourself from buying every great deal you see. Sticking to a specific shopping list prevents the purchase of superfluous, unnecessary luxuries.
Couples that are being supported by their parents and/or in-laws should not take this generosity for granted. The use of a parent’s credit card doesn’t mean that the couple should go out to restaurants or cafes for lunch multiple times a week. The parental support is a privilege, not a right, and needs to be treated as such.
For this reason, it is always important to show gratitude.
Many parents who are supporting their married children complain to me that they feel as if their children take this rare gift for granted. They are happy to provide the financial help, but are disappointed that they have never received a simple thank-you for their support.
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 even though this may seem too far in the future, it would be a good idea to put it away for a down payment on an apartment, pay for a bar mitzvah or even marry off children in the future. If a couple starts saving immediately, it makes future expenses much easier to deal with.
Mazel Tov!
Aaron Katsman is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the US. Securities are offered through Portfolio Resources Group, Inc. a registered broker dealer, Member FINRA, SIPC, MSRB, SIFMA. For more information, call (02) 624-0995, visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.