Table of Contents
- 1. Create Financial Goals Together
- 2. Cut Costs To Boost Your Savings
- 3. Investing Your Savings
- 4. Retirement Planning
- 5. Set Aside An Emergency Fund To Cushion Unexpected Expenses
- 6. Planning To Save For A Home Of Your Own
- 7. Budgeting
- 8. Consider Your Options For Emergency Financing
Most newlyweds will have to learn new habits as they integrate their lives together, and financial habits are just one crucial aspect to a new married couple’s life together. Newlyweds in the thrill of togetherness forget that financial bonding is as important as forming physical and emotional attachments in life and the success of marital life, to a large extent depends on the savings, investment and spending habits of the partners. A solid financial base goes a long way in promoting marital harmony.
If these financial goals and attitudes aren’t discussed beforehand, tensions and misunderstandings may arise that could undermine the relationship further. So what should a couple to do keep these conflicts at bay?
1. Create Financial Goals Together
What’s life without a goal? Couples need to sit down together and write down all the future financial goals that you both agree on. Then plan your savings in three tiers-an emergency fund, a short term savings fund and a long term savings corpus that includes retirement.
2. Cut Costs To Boost Your Savings
Unless you meticulously track all expenses you will not know where income is leaking. To start with cut the cost of daily fast food and coffee intake to the extent of just $10. That small cost cutting will save you more than $3,000 annually, enough to boost all the three savings categories.
3. Investing Your Savings
Once you have mobilized enough savings you can park the money in minimal interest rate savings accounts, higher interest CDs and high earning money market accounts so that you have sufficient liquidity (easy access to cash) for tackling the short term and medium term goals like purchasing a car or buying a home.
4. Retirement Planning
The younger we are the more we can set aside for retirement. If, for example you were to start retirement planning at 30 years and deposit $1,000 annually into your IRA account and the savings attracts interest at 7% per annum, by 65 years you would get approximately $1,50,000. By starting earlier at the age of 20 years with the same level of savings you would be adding $20,000 extra to your retirement kitty. That’s the power of starting younger and earlier.
5. Set Aside An Emergency Fund To Cushion Unexpected Expenses
Life is full of unexpected events, and the worst part of this is not being prepared for them. Looking at the recession-hit economy it is ideal to accumulate an emergency fund covering twelve months’ expenses, or at the very least three months. This will be earmarked for medical emergencies, and other big-ticket expenses.
6. Planning To Save For A Home Of Your Own
Buying a home is top priority for many newlyweds, and a mortgage helps you in many ways. If you want to take maximum advantage of the Federal Housing Administration (FHA) loans, then making a down payment aggregating 20% of the costs will spare you the need for paying the monthly premium on an FHA guarantee or the premium on private property insurance. Split the 20% down payment year wise to arrive at your savings goal.
If you are both very clear on your financial goals you can mutually decide how much you need to save every month. If both the partners are working and earning, set aside savings from one partner’s income for health care and insurance and let the senior partner shoulder the retirement planning responsibility.
You need not embrace high technology accounting software if you can follow the golden rule of personal savings which is that roughly 50% of your income should cater to your essential needs, 30% should be earmarked to fulfill your wants, and the balance 20% should be allocated for savings.
If you observe that your savings efforts are lagging behind at any stage it will be time to create some form of additional income or to cut your expenses drastically to stay on track.
8. Consider Your Options For Emergency Financing
An emergency fund takes time building, and what if the economic crisis or personal problems don’t give you time to save quickly? Unexpected financial emergencies happen and when they do you likely begin looking at your options. Traditional bank loans could be one or you could go a faster route; title loans. Not many people realize their car title could be used when in need of much-needed cash. Get started by applying online or give us a call now at (855) 211-5880.