If you just were married, you are probably eager to start planning your future. However, as you do this, you should make sure to take your finances into account. Once you have assessed your combined assets and debts, here are five steps to build a strong financial foundation:
Align spending with priorities
Spouses should track their mutual spending, preferably using a service such as Mint or Quicken to view multiple financial accounts in one place. “When you know where your money goes, you are in control and can be thoughtful about aligning spending with priorities,” said Carla Dearing, CEO of SUM 180, an online financial planning service. Then, create a spending plan that aligns with your joint priorities.
Build a cushion for emergencies
There’s another benefit to tracking spending: It helps couples determine how much they need to make to cover monthly expenses. Ideally, you should put away six times that amount as a cushion for emergencies and unexpected expenses, Dearing said. However, you don’t have to set aside that much all at once. A cushion will give you a great sense of security and freedom. Make a plan to tackle debt
Two-thirds of millennials have at least one source of long-term debt, and more than half with credit cards carry balances. Paying down debt as quickly as possible will free up more room in your budget to save. Focus on high-interest debt first. If you carry a balance on several credit cards, pay as much as you can on the card with the highest interest rate first. Then tackle the card with the next highest balance. Consider a joint checking account
A joint bank account can help keep spending in check because spouses have to stay accountable to each other when the money is coming out of a joint account. A joint account can also cut banking costs. Often, fees are charged if you don’t meet a minimum balance requirement. However, if both you and your spouse pool your income in one account, it can be easier to meet balance requirements.
Live on one income, save the other
Living on just one partner’s income allows for earmarking the other spouse’s earnings for retirement savings, emergencies and future expenses, such as a down payment on a home. If only one spouse has an employer that offers matching contributions, focus on contributing enough to that account first in order to get the full match.