This is an important question as almost 50% of marriages in the US will end in divorce or separation, and since financial issues are one of the leading causes of divorce, it is important to lower that probability as much as possible.
Live Below Your Means
This is the most important recommendation we can possibly make! The #1 key to financial freedom is defense (expenses) not offense (income). Stay out of debt! Remember, debt is not your friend, the more your income goes into your pockets rather than the pockets of your creditors, the more control you will have over your finances. If you do anything else on this list, do this first and you will always have peace of mind financially.
Budget
In order to live below your means you need to know what those means are. People get turned-off by the thought of a budget because they do not want to feel like they are restricted from spending their hard-earned money and need permission to buy something they want.
Remember, you are the one creating your budget, which means if you want to spend a certain amount of money in a certain category, then you can build that into your budget. Either way, you are spending the same amount of money, so a budget does not restrict you, and if it does then that lifestyle would not have been sustainable for long. At least with a budget, you have the benefit of noticing the cliff in front of you, rather than waiting until you are in mid-air to find out.
For a breakdown of how to budget, use the guide below to help walk you through our recommended allocations.
Emergency Fund
When you are starting a new chapter in your life, there are many new things that you are learning or experiencing, so you don't need any more surprises financially. Stress-free is the goal here when you are starting out, do not overextend yourself by adding more stress to your life, this will only compound into problems in other areas of your life.
Having an emergency fund will give you peace of mind and prepare you for the unexpected problems that life will throw at you. Whether it is a broken water heater or a broken car, having cash on hand to help alleviate the stress will help you sleep at night.
We recommend 3-6 months of living expenses saved in a savings account.
Housing & Vehicles
Buying your home or vehicle if you do not already have one can be intimidating because it will likely be the largest expenses of your life, it is important to know what you can afford so that you do not instantly regret buying something that should bring joy to your family.
Homes and vehicles in particular, can present a dangerous trap for a young couple because they are expensive items that can easily be blown out of proportion if you are making a purchasing decision based more out of emotion than planning. The last thing you want is for your dream house or dream car to because a nightmare financially.
It is easy to get excited about a beautiful home, or a fully-loaded car, just make sure you get excited about those things while staying within your budget, you'll thank us later.
For things to know when shopping for your home, check out the guide below.
FAQ - Buying a House (rulerfinancial.com)
Investments
Once you are living below your means and have an emergency fund in place, then it is time to start thinking about continuing down the path to financial freedom with debt elimination and investing.
You have saved your money (emergency fund in cash), but where most people miss the boat is they continue saving in cash and have little if any investments. Cash savings is important, but up to a certain point, because inflation will destroy the purchasing power of that cash a little bit each year.
The first investment you should make is in your employers retirement account if they offer a match. For example, If your employer will match 5% of your retirement contributions, then contribute 5% of your paychecks into that account and then move on to your next investment opportunity.
Next, focus on tax-advantaged retirement accounts, namely Roth IRA's. You can open up one account for each spouse and the money will grow tax-free, saving you thousands in taxes.
You can open up these accounts with M1 Finance using the link below.
The Finance Super App | M1 Finance
Charitable Giving
Last but certainly not least, make sure that you start giving away 10% of all the money you earn. Tithing to your church, charity or community is important not just because you are helping support the needs of others around you, but it starts establishing a mindset that you do not need to spend everything that you have on yourself. This can seem difficult to afford, especially in the early years of marriage when your income will be lower than your average potential, but remember that you are giving away a percentage of your income, not a fixed dollar amount.
There are many reasons why the wealthy donate so much money to charity each year, other than the moral and spiritual reasons we listed above, they have found that when you are generous with your money, you become more generous in other areas of your life as well. It is not simply giving away money or volunteering your time to help those less fortunate than yourself for the sake of charity, but to contribute a portion of your time and resources to help make a positive impact in the community around you rather than only helping yourself. If you cannot get to place where you can mentally give away $1,000 then you will never get to a place where you can financially give away $100,000.
If you have made it to this point and still have money to invest, reach out to us to see what your next step should be, but feel free to celebrate as you are in a top tier position financially, with a strong foundation that will keep you feeling safe and secure.
We use cookies to analyze website traffic and optimize your website experience. By accepting our use of cookies, your data will be aggregated with all other user data.