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One of the challenges newlyweds face is adjusting to, or reviewing, their new financial status. Each individual must now manage their own spending, as well as make adjustments to accommodate the financial personality and skills of the other. Planning is of course essential. In order to do this, you may require help from a financial advisor. Naturally, the age of the couple and asset holdings of each individual will play a major role in determining their options.
Here are a few tips for the future:-
Determining short and long-term goals set the course for the basis of an investment portfolio. Marriage may change an individual's goal as it's no longer just me but rather us. A likely long term goal may be for example, purchasing a home. The next step would be deciding on how much to invest and what to invest in, in order to make this dream a reality.
The first step in any budget is to know how your money is being spent. A single person spends their money as they wish, however, such decisions now affect your partner. An excellent start is to track your personal spending for one month by writing down all expenditures. This procedure will lead to a mutually beneficial means of merging spending habits.
Couples should itemize all accounts and investments. This will provide a true picture of what they are working with, thereby enabling them to make better decisions. Take the time to decide on what your financial goals will be, e.g. home ownership, further education and retirement.
Younger couples can afford to be more aggressive about investing in equities/stocks as they are more likely to be able to weather the normal ebbs and flows of the market. However, it is best to seek professional advice to determine the most suitable products to invest in.
A more conservative (i.e. risk averse) couple may prefer to invest in long term, tax-free accounts. Unit Trusts are also great options for investing.
Consider a joint account for shared expenses such as rent and utilities, while maintaining individual accounts for personal expenses. Questions will arise regarding how much will each party place in this account? Is this amount to be a flat sum or, a percentage of salary? There are no right or wrong answers to these questions, as it all depends on personal preference.
Many couples avoid the issue of how to deal with debt that may have been incurred prior to the union. This may not be a very romantic topic to deal with but it is an issue that requires attention, as it impacts the disposable income each person will have.
Establish an emergency cash reserve for any unforeseen emergencies that may arise such as redundancies. The recommended reserve is (3) three months' salary. Contributing to your pension plan offered at work is also an excellent idea. The point of such a plan is to ensure that you both will be financially stable for retirement.
There are many things to consider when you decide to buy a house. For instance, the type of home you need and your lifestyle. Not only should you think about your current needs, but your future needs as well. Here are some additional considerations when making that all-important home-buying decision.
The first order of business is to decide which part of town you would like to live? Think about the distance between home and school (if you have kids), or home and work. Do you want to live in a central area, or out of the town? Maybe you'll prefer to be close to stores and public transport, or even medical and social facilities. These should all influence your decision.
You will also need to decide if it suits you better to purchase an existing house, or purchase land to build one. Naturally, this largely depends on what you can afford and the time that you have to dedicate to either process. If you're buying an existing house, select it carefully, inspect for damage to its structure, and if necessary, ask for the opinion of a professional who can assist in the inspection. Under no circumstances, should you give in to the pressure of the sales person, after all, it's your money being spent. Aim to check out similar homes as well, shopping around is always smart, and may give you the added reassurance that you are paying a fair price at the end of the day. Be sure to make note of the fine print as well.
If you're building a house, be cautious as this will be a more intricate process that requires great care and many require that you seek the advice of professionals. Work from a total budget, which should include all possible expenses involved in this process. Keep track on the progress of your house with your contractor as things go along and it is imperative that you aim to conduct regular site visits, to see the process for yourself and meet with the supervisor on site. If you're unable to do so, make arrangements with someone you trust, to conduct the visit on your behalf.
This is the most important decision of all; you have to be able to afford it. How much of a deposit would you have to pay? How much can you afford to borrow? You can explore various loan options, based on interest rates being offered and the tenures available for the repayment of the loan. Figure out the additional costs that you will now have to incur, being a homeowner. Maintenance costs usually surprise many first time homeowners who don't factor in these inevitable expenses. Explore the ways you may be able to save money on certain utility bills and insurance. Of course, you can't forget your expenses that will continue to occur into the foreseeable future. Know whether or not your budget will be able to accommodate expenditure relating to your family, car, education, as well as any unforeseen circumstances. At the end of the day, you need to know how your home loan will fit in with your other expenses.
Seek reputable financial institutions to discuss your loan options to determine which one you're most comfortable with. Do this as early as possible, before you start the ball rolling on buying your home. As always, it is ideal to implement investment plans to help you in achieving your goal of home ownership. That way, you would have given yourself a head start where financing your home is concerned. There are many investment options available at various financial institutions, so feel free to liase with your investment advisor to discuss the options that would best suit your goals and your needs.
We all want to live in our dream home, send our children to the college of their choice, and retire comfortably so that we can do whatever our hearts desire. The key is knowing how to do it!
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