Your Investments: Money tips for newlyweds

After the wedding, they are plunged into a new world, where there is a household to run and finances to take care of.

By AARON KATSMAN
It’s now June and the spring/summer wedding season is in full swing. 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: Which china pattern?
One major issue that is often neglected is exactly how the young, inexperienced couple will handle their money. Deborah Shouse, coauthor of the book Yes, You Can... Achieve Financial Harmony, writes: “Communicating about money is one of the top challenges for even the most open and articulate couples. Before you can build a financial foundation that supports your wants and dreams, it’s necessary to understand what goals are important to you and your partner and why they are important.”
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 who have accumulated as much as $25,000 in debt within six months of their wedding simply from setting up their home. Newlyweds 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. 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. Make a list of what you actually need before you go shopping, to prevent yourself from buying every great deal you see. Sticking to a shopping list prevents the purchase of unnecessary luxuries.
Couples who are being supported by their parents should not take thisgenerosity for granted. The use of a parent’s credit card doesn’t meanthe couple should go out to restaurants or cafes for lunch severaltimes a week. The parental support is a privilege, not a right, and itneeds to be treated as such.
For this reason, it is always important to show gratitude. Many parentswho are supporting their married children complain to me that they feelas if their children take this rare gift for granted. They are happy toprovide the financial help but are disappointed that they have neverreceived a simple thank you for their support.
START SAVING
As soon as possible, a new couple should start a disciplinedmonthly/annual savings plan. It is a good idea to use some of thewedding money for this purpose. Many couples receive a substantialamount of money as wedding gifts. Even though this may seem too far inthe future, it would be a good idea to put it away for a down paymenton an apartment, pay for a bar mitzva or even marry off children in thefuture. If a couple starts saving immediately, it makes future expensesmuch easier to deal with.
Mazel Tov!
aaron@lighthousecapital.co.il
Aaron Katsman, a licensed financial adviser in Israel and theUnited States, helps people who open investment accounts in theUS.