Quote of the Week: “Life has taught us that love does not consist of gazing at each other, but in looking together in the same direction.”~ Antoine de Saint
The invitations, cake, wedding reception; you have done a lot of planning together. However, before you walk down the aisle it is very important for you to talk about your personal finance goals. Managing your personal finances is difficult enough when you are single, adding a family to the mix makes it feel like your wallet is leaking.
Getting married is exciting, but it brings many challenges. One challenge that you will have to face is how to merge your finances. Planning carefully and communicating clearly is important because the financial decisions that you make now can have a lasting impact on your future.
Although the process of setting financial goals can be challenging, it brings you closer and reduces tension over money. A solid financial plan can help you build financial independence for you and your loved ones. Below are significant steps that need to be taken to ensure that the financial security of your loved ones is protected.
Discuss Your Financial Goals
The first step in mapping out your financial future together is to discuss your financial goals. Start by making a list of your short term goals and long term goals. Then, determine which goals are most important to you. Once you have identified the goals in order of priority, you can focus your energy on achieving them.
Prepare a Budget
Next, you should prepare a budget that lists all of your income and expenses over a certain time period, you can designate one spouse to be in charge of managing the budget, or you can take turns keeping records and paying the bills. If you and your spouse are going to be involved, make sure that you develop a record keeping system that both of you understand.
Have an Emergency Fund
Now that you are thinking of starting a family, an emergency fund is a necessity. Think of it as a rainy day fund for those unexpected events in life that could potentially knock you out financially like sudden loss of employment. Plan on having at least six months of expenses not only stashed away, but also growing at a rate higher than the rate of inflation.[Learn Why at The Economics Of Personal Finance]
Retirement savings are not mandatory and more often than not, the need to save for children’s education often overrides the need to save for retirement. However, you can save for your children’s education and still set aside your retirement contributions. There are several options for financing a college education, but not for retirement. You cannot get a scholarship for retirement or get a retirement loan, you have to take care of yourself too.
The retirement investing options open to married couples vary widely, from individual pension plans to employer-sponsored plans. Deciding which retirement investing vehicle is appropriate for you as a couple is a personal choice and should be a big part of your financial planning picture. Unfortunately, you cannot have a joint individual pension plan to save for your pension but you can save individually in one plan.
Review the options available to you carefully and determine which plan provides the best benefits. Overall, you should endeavor to maximize your contributions in the pension plan.[Read More: Don’t Play Catch Up With Retirement Savings]
You do not need to have the same interests to have the same goals when it comes to finances. Like the scales of justice, there is a balance to our personal finances as well. In a spousal relationship, sometimes these scales tip one way or the other, but over time they can work to better balance one another.