1. Marriage & Money Setting Up Your Financial Household Marriage & Money
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Notas del editor
Everyone looks forward to their honeymoon… but what about the “moneymoon?” It’s when the wedding is over and life together begins — including your financial life.
Creating a few simple plans in the beginning of your relationship can lead to nuptial and financial bliss in the long run! Create a household budget and stick to it! Pay down any debt accrued before you got married. Start saving for your future together Plan for the unexpected. As a couple, create a total financial game plan. Let’s review these five simple steps that can help you keep the moneymoon alive.
Many experts suggest that you should allocate no more than the following percentage of your gross income to the following categories. Gross income is your income before taxes. REVIEW BUDGET GUIDELINES Keeping finances separate or joining your bank accounts is a matter of personal preference. But whatever you decide, don’t forget to communicate! More than 70% of couples say they talk to their partner about money at least once a week. (Smart Money, November 2003)
DO break your bad debt habits. DON’T delay paying off credit cards completely. DO communicate honestly about your spending habits. DON’T abuse your credit. Starting a new marriage with a huge debt load can be burdensome.
DO break your bad debt habits. What’s more of a financial downer than debt? Two people’s debt! And considering the average household with one or more credit cards owes more than $8,000 on those cards, starting a new marriage with a huge debt load can be burdensome. (Parade, July 13, 2003)
DON’T delay paying off credit cards completely. The average American household pays about $1,000 in credit card interest per year. (Money.CNN.com, January18, 2004)
DO communicate honestly about your spending habits. According to a survey, almost 40% of men and women admitted lying about how much something they bought had cost (Smart Money, November 2003)
DON’T abuse your credit. Although it might be tempting to buy furnishings or electronics for your new home, impulse purchases can really add up and harm you down the road. In the fiscal year ending September 30, 1.66 million bankruptcies were filed —- up 7.4 percent from the year before. ( The Atlanta Journal-Constitution , January 18, 2004)
Starting a family or retiring from your job might seem like a long way off, but it pays to start planning early. Saving and investing is an essential part of your financial game plan — and it means more than just putting a few dollars in a savings account. Your savings game plan should include: Emergencies: enough to cover 3 months of expenses Short Term Goals: save up for big ticket expenses Child’s Education: starting early makes a difference Retirement: Social Security can’t do it all
Emergencies: According to a recent survey, only 28% of households said they have enough money saved to weather a financial hardship. (Money, April 2004) If you have to make a home repair or supplement a spouse’s income due to unemployment, it’s essential to have cash on hand. A good goal to shoot for: enough money to cover three months of core expenses. (Parade, January 19, 2003)
Short Term Goals: Maybe you’re dreaming of a summer vacation, new appliances for your home or another big-ticket purchase. Save up for things like travel — it’s better to pay cash than get locked into high interest credit card debt.
Child’s Education: If you plan to start a family, it’s a good idea to think about education as well. With annual tuition at a 4-year public university topping $4,000 in 2003, starting early makes a big difference. (Time, November 2, 2003)
Retirement: Are you among the 30% of workers that haven’t saved a dime for retirement? (Kiplinger’s, March 2004) Start saving and investing now, because Social Security can’t do it all. In fact, the average Social Security benefit check pays just $899 a month. ( SSA.gov, “Social Security Basic Facts,” May 2004) Could you and your spouse live on that?
When you’re married, you may depend on your spouse’s income to help pay the mortgage and other living expenses. No one wants to think about tragedy or loss, but you should discuss with your spouse a game plan if something unexpected should happen.
While nothing can replace the loss of a spouse, a term life insurance policy protects your family if something should happen. Depending on your expenses or if you have children, you may need a policy that covers between 6 and 10 times your income. ( Money.CNN.com, August 4, 2003)
In addition to considering a life insurance policy, it’s important to talk about each other’s wishes if one of you should die. A will gives legally binding instructions for the distribution of your property and the care of your children if you pass away.
Planning for the unexpected, saving for retirement, paying off debt… as you start your new life together, does all of this seem daunting? It doesn’t have to be.
Before you smile for the wedding photographer’s cameras, get a “financial snapshot” taken. Primerica offers a free Financial Needs Analysis (FNA). The FNA gives a detailed overview of your current financial situation and suggests a personalized game plan for your financial security. The FNA is complimentary, confidential and customized for you and your spouse.
Your wedding is only the beginning of sharing your life with someone and the FNA is only the beginning of creating a total financial game plan. Your Primerica representative will work with you — in your home — to provide solutions that can help you get off to a great start financially.
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