While June is an extremely popular month for weddings it is also a great time for newlywed couples to sit down, talk about their household budget and establish some financial priorities for their future. The fact is, a majority of newly married couples begin their marriage with both in debt from either student loans and, sometimes, credit cards.
Recent information released by TransUnion, one of the big three credit reporting agencies, shows that in the five years between 2007 and 2012, student loan balances increased a whopping 75%. They also showed that, on average, consumers have outstanding debt of just under $24,000. And that to the fact that the average credit card debt per consumer is approximately $5200 and you can see where newlywed couples might need a little bit of financial information to get them back on the right financial track.
With that in mind we put together a blog with some excellent personal finance tips for newlywed couples. Enjoy.
- While we realize that love is mostly blind, it’s best to know how your future spouse handles their finances before you get married. Just because you agree on everything you should never assume that your spouse to be has the same beliefs and habits when it comes to money that you do.
- Before the big day, you should reveal everything about your finances to your fiancé, including the amount of money that you make, the amount of debt that you have, any tithing that you’re involved in and your retirement accounts as well. It’s also a great idea to share with each other your bank statements from the past year and compare strengths and weaknesses as far as your spending and saving habits.
- Both spouses-to-be should get copies of their credit reports from the big three credit bureaus. These reports will give you a crystal-clear picture of all of your credit accounts, your debts and so forth. A goal to aim for is a credit score over 750 because this will allow you to get the lowest interest rates on any loans that you wish to take out as a newly married couple, including mortgage loans.
- If the person that you are going to marry has been married before, you should definitely find out about any financial obligations that he or she has to their ex-spouse and to any children that they might have had together.
- It’s vital that you have a wedding and reception that you can afford. Starting a life together thousands of dollars in debt because of one party and one vacation is definitely not a great idea.
- If both of you are working and it’s possible, you should live on 1 salary and save as much from the second as possible. This is a great way to fund an emergency account and start building your retirement nest egg. It can also help if you decide to change careers, start a business or go back to school, as well as starting a family.
- Avoid credit card debt wherever you can and, if it’s not possible for you to pay for something in cash, it may be a better idea to just avoid the purchase until you can.
- If you haven’t had any history of paying bills together before you actually get married, one of the first things that you should do before your first bills start coming in is decide who’s going to take care of the finances, who’s going to take responsibility for paying bills on time and so forth. If you decide to keep separate accounts, knowing who will be paying for what bill and which account will be used is also important.
- Even though you’re now a newly married couple, each of you should have a credit card in your own name so that you can build up your individual credit scores. Try to hold on to that credit card as long as possible and use it for a purchase or 2 every month, paying the bill immediately in full at the end of every month. If you can build a long-term credit history with one or two credit cards your credit score should remain very high throughout your marriage.
Marriage is a big step financially and, before taking that step, you and your spouse to be should definitely sit down and have as Frank talk as possible about money. When you consider that problems with money are the number one cause for divorce, it only makes sense to get some of those problems out of the way before the wedding bells ring. Good luck and, of course, congratulations.