It's wedding season and couples across the country are spending all their time planning expensive weddings and honeymoons. That's all well and good, but once you get home, it's time to put the lavish spending aside and figure out a plan for your financial health as a couple.
Here's my five step plan for how newlyweds can get their finances on track right from the start:
First, figure out how you're going to pay the bills (both where the money is going to come from and who will actually do it). It may make sense for one person to take it over (whoever is best at dealing with paperwork) and the other to contribute funds to a joint checking account.
Cap discretionary spending (but not so much that either of you feels hemmed in). Here's an easy way: Set a limit for how much you can each spend on an item without consulting the other. $100 is probably a good number for starters. That way, you can buy a new shirt without 'permission,' but you can't go buy a $600 flat screen TV without you both agreeing it's a good idea. It will prevent many a fight.
Strategize on debt. Disclose all debt to each other and figure out how you are going to pay it off. That may mean one spouse covering the other's past debts for a while, but it will serve you both well if you can get rid of high interest payments and improve your overall credit score as a couple.
Save for retirement. Believe it or not, you probably have more free cash now (before kids) than you'll have in the future, even if your income goes up. Try to save as much as you can in a 401(k) or Roth IRA now. It will give you a great cushion that you'll appreciate when times get lean.
Plan for the future. Everyone starts thinking about buying a house. But here's a few things you may miss -- Will one of you want to go to graduate school in a few years? Start thinking now about an equitable way to cover the expense. If you plan to have children, even if not for another five years, move to a neighborhood with great schools. Finally, don't get saddled with a time share, even if it seems like a great idea while you're enjoying your honeymoon.
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