Just engaged (or married?) Congrats! Follow these money moves for couples to grow richer together as you grow old together.
As a newly-engaged couple or newlyweds, you’re probably getting lots of advice from everyone around you. Some of this advice may be solicited, while much is not. Well, today, you’re going to get three more pieces of advice. The good news is that it has the power to transform your financial situation. Read on for our top personal finance tips for newlyweds:
Openly Share Your Entire Financial Situation
It’s important to be open and honest with your partner in all aspects of your relationship, but especially when it comes to money. Whether you’re just engaged and trying to set your wedding budget or just married and saving for your first downpayment, now is the time to come clean about your credit history if you have yet to do so.
For many, marriage means combining finances and financial responsibilities, so it’s imperative to understand where both of you stand in regards to savings, debts, etc.
A great place to start is to get a full credit report and credit score. This will help the two of you understand the current situation so you can make a plan for what to do next.
Be Prepared in Case of Emergencies
When it comes to saving for emergencies, most Americans are woefully unprepared. A 2018 study by the Financial Industry Regulatory Authority (FINRA) revealed that 46% of households don’t have suitable rainy day funds.
The best way to protect yourself from unexpected expenses — like a major car repair, a hospital stay, or a stint of unemployment — is to start saving now. Most experts suggest having enough money put aside to cover a minimum of three to six months’ worth of expenses for your whole family.
And as a bonus, if you keep your savings in a high-yield savings account, you’ll earn interest on your savings while you grow your emergency fund.
Pay Yourselves First
Once your emergency fund is fully stocked, make saving for other short and long-term goals a priority and a habit. As Dave Ramsey suggests, pay yourself first by contributing to your savings before doling out your discretionary spending allowance. It’s important to save for sunny days just as much as the rainy ones!
This obviously means you’ll need to establish a monthly budget for yourselves. You should have plenty of money left over when you deduct your monthly expenses from your income. If not, you may want to consider finding ways to cut back, or try our next suggested money move for couples!
Live on One Income
Instead of looking at each of your salaries as your own, you can take the approach of looking at all of it as “our money.” This outlook will greatly simplify your finances, encourage open communication about money, and help you gain momentum as you work together toward your shared goals.
When you pool all of your money together, you have access to more funds, period. For some, it may be possible to live off of just one income and devote the other to a specific financial goal. Whether you put it towards paying off debt, creating an emergency fund, or saving up a hefty down payment for your first home, you’ll find that you’re able to make more progress and keep your motivation levels high when you’re in it together.
Keep Working While You’re Child-Free
If you’re not itching to start a family right away, give yourself time to enjoy the perks of the DINK life. DINK is an acronym for a dual income no kids household and is one of the most powerful money moves couples can make. Using this time can be critical in setting yourself up for financial success in the long run. Combined with living on one person’s income, you can sock away a significant amount of savings during your pre-baby years before spending to raise a child.
Maximize your DINK savings during this time by:
- Finishing your degree to land a better-paying job.
- Learning a new skill to net you a raise or make you more marketable.
Create Multiple Streams of Income
A lot of younger newlyweds are facing student loans, a car payment, and even a mortgage. A few hundred dollars more each month could make a huge impact on your financial life. Having multiple streams of income is also a great way to protect yourself in case of unexpected expenses, job loss, or even retirement. Side hustles are all the rage, and can be a fantastic safety net should the rug get pulled out from underneath you. (You know, like because of a pandemic or something.)
Some options for earning more include:
- Starting a side business.
- Taking on an extra job like pizza delivery, waitressing, or pet sitting.
- Earning extra money online.
- Investing in stocks or real estate
Truly, having something to keep you afloat should your job situation change is an essential money move whether you’re single or in a couple.
Get Life Insurance
It’s never too early to make end-of-life plans. Now that you’re married, it’s not just you anymore, and you need to plan for your family’s financial future.
Depending on your age and health, life insurance can be a cheap and easy way to make sure your family is protected from financial ruin if the worst should happen.
All of this may seem a little morbid, but don’t let it ruin your post-honeymoon glow. There’s nothing more loving than ensuring your loved ones’ financial security.
This article originally appeared on The Budget Savvy Bride, and has been republished with permission.