Financial Steps for Newlyweds

Posted by: Michael S. | Jun 05,2008


In many ways this is a tough time to be a newlywed, as it’s also a tough time to be a recent college grad who’s now entering the job market.  Basically, it’s a tough time to be young, who comprise the vast majority of newly-wedded couples.  Newlyweds are all about the future: first comes love, then comes marriage, then comes a baby in a baby carriage.  Oh, and then comes buying a house, then comes saving money, and then comes making smart investments.  Those last three don’t sound quite as romantic.  

If you’re recently wed, you’re no doubt thinking about buying a home and having children.  With so many people facing personal debt in the form of credit card debt and loans (car, student, etc.) it would not be surprising if both spouses come to the table with personal debt of $5000 or more, sometimes much more.  When you add that to the fact that the housing market is in disarray and it can be more difficult to secure new loans, it can make for some rough going for newly married couples.  

So what can you do.  The first thing you do is realize that you’ve got a problem.  Even if you’re problems with personal debt aren’t that extreme, there is no denying that the economy and housing market are going through a difficult period.  You can’t control that but you can control your own finances.  It’s always important for newlywed couples to get together and set up a financial plan, but in an economic climate like today, it’s even more vital.  

So here are the steps to take:

1. Set your goals.  Determine what you need: the type and price of home, for example.  This will vary greatly between couples and it will help determine how much flexibility you have with step two.
2. Budget.  Get together all of your expenses – bills, daily costs, everything.  Subtract that from your collective monthly income.  What do you have left over?  Funneling some of that directly into a savings account is a good idea because it ensures that you won’t spend it on something frivolous.  Remember, some amount of frivolous and entertainment expenses should be part of your budget.  It would be unrealistic to suggest you’ll never buy something that you don’t “need.”  
3. See where you can cut corners.  This could even amount to moving to a smaller, cheaper apartment to help save money.  Though I mention frivolous expenses as being inevitable, you should cut these out as much as possible, as well as any other financial fat: such as buying name-brand items instead of generic (they’re basically the same thing).  
4. Figure out a debt payment plan.  Though it may take years to pay off debt fully, you may not be buying a house for years to come either.  Figuring out how to pay off debt now means better financial prospects in the future.  Clearing up your individual credit ratings by paying off debt is also supremely important.  

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