Your Investments: Start your marriage on the right foot

A newly married couple has the benefit of starting off their marriage with a clean financial slate.

By AARON KATSMAN
With warmer temperatures outside, it must mean that wedding season is upon us. One common scenario that I have come across is that of a newly married couple living in Israel and being supported financially by their parents. In one particular situation that I recently had to deal with, the husband, straight out the IDF, was starting his university studies, and the plan was for him to get an advanced degree sooner rather than later.
The parents, who could be defined as “comfortable,” wanted me to speak with him and his bride about financial responsibility. This was because, though they wanted to give the couple what they needed to live on, they didn’t want to create a situation where their newly married children would spend their money on whatever they wanted, with the idea that they could always ask their parents for more.
Clean slate
A newly married couple has the benefit of starting off their marriage with a clean financial slate. In addition, usually at the beginning of marriage, the lines of communication between husband and wife are still good. This gives them a great opportunity to align their short- and long-term goals.
The young couple is still philosophical at this stage; they can talk about their dreams and create a plan to achieve them. They have not yet entered the stage where the great philosophical debate of the day is where to buy the cheapest diapers, and how many packages they should pick up, because maybe next week there will be a better deal in the store.
Budget
It is vitally important for the new couple to learn how to budget. Each shekel that is spent or earned should be recorded, even to the extent of writing down each expense in a notebook. Unfortunately, many young couples end up accumulating as much as $20,000 in debts within the first six months of their marriage just setting up their home, with no end in sight. Such a couple wants the same standard of living that they grew up with, but they don’t understand that it took their parents years of hard work to get there.
Examine spending decisions
Each spending decision that you make is instrumental for staying out of debt. If you are deciding whether to buy a new wall unit – or even whether to pay NIS 50 for a lunch date with your best friend, when you could invite her home for a lunch that would only cost NIS 10 – think about whether it’s necessary to spend the money. Although there is nothing wrong with spending money in principle, if you are living on limited resources, you have to use the money that you have wisely so that you can make it through the month.
A newly married person is an adult who needs to take responsibility for his or her actions. Those whose parents are supporting them should be grateful for being given that opportunity, and one should avoid demanding any more from them at all costs. Rather, we should show our parents a special hakarat hatov (appreciation) for this privilege, as it shouldn’t be taken for granted.Start saving
The new couple needs to start a disciplined monthly/annual savings plan as well. A good place to start is by investing a portion of the money received as wedding gifts. Although most young couples tend not to think about it, it is worthwhile looking to the future and considering how to pay for the next generation of weddings in another 20 years. By starting to save immediately, such future expenses will become much easier to deal with.
Love your children
If you really want to help your children before they get married, talk to them about the importance of a household that is well-run financially, and save them from making serious mistakes that could cost them the rest of their lives.
aaron@lighthousecapital.co.il
Aaron Katsman, a licensed financial adviser in Israel and the United States, helps people with US investment accounts.