A few months before our son’s recent wedding, I sat down with him and his fiancée and talked about (what else?) money. I’ll be doing the same soon with the younger of our two daughters and her fiancé, who recently became engaged.
All four of these young adults are responsible citizens, living on their own earnings from respected if not highly paid occupations. (So is our older daughter, a real super saver.)
I gave the young couples some fatherly advice about their personal finances, derived from the institutional wisdom of this magazine. Here are my key points.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
1. Don’t jack up your lifestyle. It is a fallacy that “two can live as cheaply as one,” but combining your households can save money on rent, home-cooked meals and transportation (if you can share a car). It’s like found money.
This surplus income might make you feel as if you’ve hit the jackpot. Now you’ve got more money to spend on some of the things you’ve always wanted — electronics, clothes, travel and dining out more often, for example.
My advice: Don’t. Leave your spending as is (or, ideally, trim it a little) and budget your combined incomes to pay down student debt and credit cards, contribute regularly to your favorite charities, and boost your savings. Even better:
2. Live on one salary, save the other. Don’t assume that each of you will always have the earnings you do now. Think about the interruptions of income — voluntary or unexpected — that could lurk a few miles down the road. One of you might get laid off. One might want to change careers or start a business. One of you might want to go back to school, full- or part-time. If you start a family, one of you might want to stay home with your children for a few years.
You’ll have more options in such situations if you have enough savings to replace one of your lost or reduced salaries for an extended period — without a sharp drop in your future lifestyle. To plan for that day, start banking all or most of one of your two salaries.
3. Max out on retirement savings. I know that a financial need that’s 40 years off may seem pretty abstract to you now. But let me put it this way: No one else will provide for you if you don’t save now.
Sure, you’ll have a small monthly check from the government someday. I dispute the cynical belief, common among your peers, that “Social Security won’t be there for me” — that it’s destined to collapse. It will still be there, but your monthly benefit, 40 years from now, will represent a lousy investment return on the hefty taxes that will come out of your paychecks for decades — 12.4% of your earnings, the combined tax bite for you and your employer.
That’s why you should contribute as much as you can to your tax-deferred retirement plan at work — your 401(k) or 403(b) — to get the maximum match your employer offers. Ditto for your individual retirement accounts or Roth IRAs — and each spouse should have an account.
Your retirement-savings goal should be to save no less than 10% of your combined gross income each year. That’s in addition to the savings I described above, which you should consider your family’s accessible “working capital,” there for special needs that arise.
4. Get some insurance. As newlyweds, you need protection against catastrophic medical bills and a long-term disability with loss of income. Life insurance is good, too, but that can wait until children arrive, when you’ll need plenty of it.
5. Enjoy life, while living within your means and sleeping well at night. Good luck to you!
This piece was originally written by Kiplinger in 2013.
Related Content
-
3 Ways to Stretch the 2026 Social Security COLA For Your BudgetThree steps retirees can take to stretch the Social Security COLA to fit their budgets.
-
How to Keep Your Charitable Giving Momentum Going All YearInstead of treating charity like a year-end rush for tax breaks, consider using smart tools like DAFs and recurring grants for maximum impact all the year.
-
Uber Takes Aim at the Bottom Lines of Billboard LawyersUber has filed lawsuits and proposed a ballot initiative, in California, to curb settlements it claims are falsely inflated by some personal injury lawyers.
-
3 Ways to Stretch the 2026 Social Security COLA For Your Budget
Three steps retirees can take to stretch the Social Security COLA to fit their budgets.
-
Giving Tuesday Is Just the Start: An Expert Guide to Keeping Your Charitable Giving Momentum Going All Year
Instead of treating charity like a year-end rush for tax breaks, consider using smart tools like DAFs and recurring grants for maximum impact all the year.
-
Uber Takes Aim at the Bottom Lines of Billboard Personal Injury Lawyers
Uber has filed lawsuits and proposed a ballot initiative, in California, to curb settlements it claims are falsely inflated by some personal injury lawyers.
-
6 Jimmy Buffett Lyrics Every Retiree Should Live ByNo, it's not just Parrotheads who can learn something from the legendary rocker.
-
11 Cities With the Cheapest Groceries in the USIf you live in one of these 11 cities, you're paying less than the rest of the country to keep your fridge stocked.
-
A Financial Adviser's Health Journey Shows How the 'Pink Tax' Costs WomenFact: Women pay significantly more for health care over their lifetimes. But there are some things we can do to protect our health and our financial security.
-
Giving Tuesday 2025: 'Every Small Act Makes a Major Difference'GivingTuesday encourages generosity in any form, from donating to charity to helping your neighbors.
-
How to Position Your Portfolio for Lower Interest RatesThe Federal Reserve is far from done with its rate-cutting regime. This is how investors can prepare.
