The first few years of marriage are some of the most exciting. It is a time of freedom and change- new jobs, new living arrangements and making life decisions with your spouse. For many, one of those decisions includes having children.
Getting married and starting a family is an emotional decision, but also a financial endeavor. Prior to getting married it is important for a young couple to get on the same page when dealing with finances. Once married, your financial success is a result of discipline and education. The six areas a young couple should focus on are:
- Developing a household budget
- Disciplined yearly contributions to qualified retirement plans: This would include company plans such as a 401(k) or 403(b) as well as ROTH IRAs.
- Control your debt: avoid the pitfalls of credit cards while paying down college loans.
- Creating a liquid cash reserves (money market) in case of an emergency: 3-6 months of expenses is recommended for most couples.
- Become educated on investing and investment planning: With the guidance of a financial professional.
- Start Saving for Big Ticket Items – Including, but not limited to a house, a new car purchase, a new family member.
Prior to the arrival of the newborn, it is important to reevaluate your financial situation and begin to plan for the changing financial priorities. At a minimum, you will need to:
- Create or Update your wills
- Review your life insurance to make sure you have adequate coverage
- Evaluate your health and disability insurance coverage
- Reevaluate your household budget
While all of these are important to complete, your household budget review will take the most time, the most effort, and the most consideration. There are a lot of life decisions that accompany having a baby. Maternity leave and post-baby employment will have a major impact on household income.
On the spending side of the equation, it is important to understand the costs associated with a new member of the family. Over time, the expense of diapers, clothing, and doctor visit co-pays add up. We suggest taking a “non-buying” trip to the store to get a grip on the cost of basics – formula, diapers and wipes.
And don’t forget to start saving for college!!!
Starting a family is exciting and will change your life forever. Prior to the big day it is important to understand what you earn, save and spend and how it will be impacted after the baby is born. Putting in the time upfront to get your financial house in order allows you to concentrate on what is really important once your newborn arrives.
For more information, Magellan Financial, Inc. can be contacted at 610-437-5650 or via email.
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