Hill Ferguson, Chief Product Officer
Love is in the air. February marks a very special time of the year. Not only does Valentine’s Day fall this month, but perhaps even more romantic – there’s a flurry of engagements happening around us. That’s because 33% of wedding proposals usually happen over the holidays.[1] Before you enter the exciting phase of wedding planning, it’s important to take some time to plant both feet firmly on the ground and set a plan for a prosperous financial future.
Whether you just started dating or have been happily married for 30 years, every relationship can use a financial check-in. Combining dual incomes, loans and investments may seem daunting, but it’s a necessary first step in creating financial coherence. The key to any successful relationship is communication, but that’s also the secret to financial success. Sit down with your partner to openly discuss goals, savings strategies and future purchase aspirations so that you can meet financial realities head on. If the goal is to have a big wedding and purchase a home in five years, or take the trip you’ve been dreaming about, a thoughtful financial plan will make it much more obtainable. Read on for some helpful tips for the various stages in your love life.
Just Started Dating – When first jumping into a relationship, dinners out and movie tickets can add up. Take advantage of what’s already in your pocket – your phone – and use it to spend smarter. Popular apps like PayPal display participating local restaurant deals in your area and Venmo can help split the bill on group dates.
Getting Serious – Talk about your financial goals and style in dealing with money. The sooner you understand how the other person thinks about and manages their money, the better off you’ll be in the long run.
Moving In – First, put it all on the table and openly discuss debt, financial obligations and sources of income. Full disclosure is key to building trust. Next, create a simple budget together and track expenditures to measure progress. Then, divide financial jobs to decide who pays each bill and how household expenses will be tracked.
Just Married – Start with a joint savings account – working together to set aside money for a relaxing vacation or new sofa will help you achieve some of your first financial goals as team. Establish clear terms about how the cash will be saved, and then track finances with tools like Mint.com, which identifies spending trends and provides weekly budget updates.
Planning to Start a Family – It may be shocking to newlyweds, but it will cost a middle-income couple just over $245,000 to raise a child to the age of 18.[2] And that’s not including college! Start discussing saving strategies today to help stay afloat when (or if) that day finally comes.
Thinking about the Future – While paying off debt or the first mortgage payment may be top of mind for most newlyweds, couples should also start saving for retirement as soon as possible. Ideally, each spouse should put away at least 10% of his or her monthly income into a 401k or an IRA account. Most companies offer 401k accounts to employees and some employers even match a percentage of every contribution, making retirement goals even more obtainable.
Happily Married – Invest your money wisely in order for it to grow substantially enough to meet long-term life goals. Many investing avenues are available, even if you can only spare a few hundred dollars. Before investing in a fund, do research and learn more about its performance as well as how it fits into your portfolio and risk factors. Online tools like Personal Capital are available to manage assets and get objective investment advice.
[1] WeddingWire Sparks Engagement Season Excitement with #JustSaidYes Campaign – WeddingWire (2015, January 5)
[2] Expenditures on Children by Families – U.S. Department of Agriculture (2014, August 18)