Initiating a married life together brings immense excitement and delight among newly wedded couples. However, amid this life-changing event, a thoughtful approach is also required for couples in managing finances. According to Scott Tominaga, having an effective financial plan is the cornerstone for promoting a stable and robust foundation of financial life – which is the key to happiness and reaching the dream financial goals weaved in concert. Here’s a handy guide for newlywed couples to navigate their financial life seamlessly.
- Set Clear Financial Goals
The foremost step in setting a financial plan involves establishing well-defined, mutually agreed joint goals. The objectives of the plan should encompass both short-term desires like saving for enjoying a vacation, as well as long-term objectives, such as buying a dream apartment, planning for retirement savings, etc. Sharing opinions aligned with these goals ascertains both partners are in accord to work in conjunction towards accomplishing them. Contextually, it makes sense to opt for a reliable financial advisor like Scott Tominaga to navigate the whole process without any flaws.
- Build a Comprehensive Budget
A thorough budget is the pillar of financial stability. Consider tracking the sources of income and monthly expenses backed by a budget app to streamline the system and make it handy. A well-structured budget enables both to understand where money is spent and helps identify areas where savings are possible.
- Whether to Consider Combined or Separate Finances
It is vital to decide whether to keep finances in combination or keep them separate. While merging accounts can simplify the complex process of financial management and promote transparency, it also demands a high degree of trust. An alternative way is to maintain separate accounts while managing shared outlays from a joint account as it provides freedom while keeping both committed to reaching common financial goals. Choose an approach that aligns with shared understanding, values, and opinions.
- Build an Emergency Fund
Keep a target so save 3 to 6 months’ worth of household expenses in a separate but joint bank account to make it accessible by anyone. This fund will provide a financial buffer to manage unpredictable events like medical emergencies, costly repairs of vehicles, etc.
- Manage Debt and Boost Credit Scores
Set a strategy to control and pay down debt, by prioritizing high-interest debt obligations first. Make a firm decision not to use credit cards unless it is too urgent and settle the account as quickly as possible. Monitoring credit scores is equally important to keeping it up to the mark, as poor score affects the ability to opt for traditional loans, and even if approved may require paying high interest rates with rigid payment terms.
- Plan for Retirement and Investments
Start contributing to retirement funds early as it can get significant returns. Consider contributing to the Employer’s retirement funds (wherever possible) such as 401(k) and equally IRAs to leverage optimal tax saving advantage. Also, diversify the investment portfolio among several investment options to minimize manage risk of potential money market fluctuation and get a high yield down the way. Working with a financial advisor is a wise decision as they can help personalize investment strategy making them well-tuned with the unified financial situation and future goals of the couples.
- Update Insurance Coverage
These days everyone considers having insurance on health, life, auto, etc. primarily. After getting married, sit together, review existing insurance policies, and consult with an insurance advisor to make needed adjustments making the coverage needs as a couple.
Finally, remember that open, clear, and honest communication about finances is key not only to fostering the bond but also to bolstering mutual financial status, goals and accomplish their life dreams.
