Money management is basically not taught in school. And so when young people get married and start living together, financial responsibility can be elusive at a time when it’s most needed. Most young couples find themselves battling with student loans and other outstanding debts. A good plan is needed to help pay off debt and outline a sound financial future as well. In this article, I’m going to explore some financial independence tips that have been instrumental in my own married life.
1. Know your finances
There’s a starting point. Now that you’re ready to plan for a sound financial future, it’s time discuss where you stand right now. Don’t wait till after years to discuss money with your spouse.
What accounts do you both have?
How much debt are you still carrying?
How do you want money to be handled in your relationship?
These are some of the things that you should discuss so that you can understand each other’s expectations.
2. Create goals
Setting long-term financial goals isn’t only fun, but also helps you stay focused. It’s important to discuss your financial goals in details. For instance, do you want to retire early? Do you want to overcome debt and make millions? We all have different goals, and it’s important to lay them out open for each other. You might also realize that it helps if you can both decide to stick to budget each month..
3. Educate yourself
Knowledge is worth as much as gold. The more you know about finances and the investment process, the more confident you’ll both feel while dealing with various financial issues. You can research online, or read various books available on the topic of financial intelligence. I’d recommend that you both read the following texts:
- Think and Grow Rich by Napoleon Hill.
- The Science of Getting Rich by Wallace D. Wattles.
- The Richest Man in Babylon by George Samuel Clason.
- Poor Dad Rich Dad by Robert Kiyosaki.
The more you know, the better decisions you’ll make!
4. Design a budget
Sticking to a budget is a great way to restrict your expenditure, and avoid getting into debt. But how do you start living on a budget? Review your joint expenses over the last couple of months and discuss how much you need to scale down your total expenditure. Your budget should allocate money for every category of expenses and should be created based on your after-tax income. It should also be a work-in-progress, not a one-day gig. You may make adjustments based on how it goes over the first few months.
5. Create a family emergency fund
I have always emphasized the need for married couples to build an emergency fund. This is money set aside in case something costly such as a job loss, family illness, major home repairs or natural disaster happens. It should be sufficient to cater for 3-6 months of expenses. Creating an emergency family fund needs to be a priority. It brings financial security and protects your union in the case a disaster comes striking.
6. Begin retirement planning with your 1st job
I get it; your retirement might not be until after many decades. But the time to start planning is right now. If the company you work for runs 401(k) plans, make sure you sign up. You can also use Roth IRA and put in the maximum amount of money you can every year. The best way to go about retirement is to configure automatic payments so you can build wealth painlessly. Towards a secure and financially-capable retirement, it is also important to consider buying Long Term Care insurance. This form of insurance pays for quality care in the case you are unable to perform at least 2 of 6 activities of daily living, either due to illness or old age. Considered that the average cost of nursing home care in the country is over $80,000, long-term care insurance is more of a planning necessity than it is an option.
7. Follow the golden rule
The worst thing you can do is result to Machiavellian tactics to navigate financial issues in your marriage. This way, the only thing you’re going to sow is mistrust. No one looks good while trying to make others look bad. So you want to make sure you treat your partner fairly. I have seen so many young couples succeed because they agreed to discuss and co-manage their finances.
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