Smart Financial Advice for Newlyweds

For the purpose of this article, it is incredibly fortunate that I've been married for all of two months. Being a newlywed investment adviser means that a lot of the principles I've learned over the years are being tested against my own personal stubbornness. Things I know to be sound advice don't necessarily seem practical to start a marriage.

Here are some steps that I believe newlyweds should take right after getting married that will help their financial futures.

Dream About the Future

Assuming you have had many in-depth discussions about money (i.e. you know each other's debt number, credit scores and salary), you need to shift gears on the technical talk. Dollars and cents are crucial to becoming financially successful, but what's more important is that you are thinking about the future.

If you have no financial destination, how will you know if you're succeeding or failing? How will you come up with ideas on how to improve your financial well-being?

You won't.

In the first month of marriage (ideally during a honeymoon or clear weekend), sit down with your spouse and talk about your dreams. Don't let money be an object. Just talk. And most importantly listen.

The musings and dreaming will turn over some interesting facts about your new partner in crime and their aspirations. You may find that everything you thought you knew wasn't really accurate. Maybe your new spouse chose his career path so that he could eventually start a food truck. Or maybe he really hates his job but believe that the best prospects are where he currently is.

When you're in "real life" mode you forget to dream with one another. So take this time to do so. It will form the loose skeleton of your financial plan.

Make Some Quick Decisions

Your first month is when you have to make some pretty quick decisions. My wife and I tied the knot in October. Changing our withholdings quickly is very important. Why? Because to the IRS, even if you get married in the last month of the year, you have to file your taxes as though you've been married for the entire year. And we can all agree that under-withholding is worse than over-withholding.

Also, you might receive quite a bit of cash gifts at weddings. If you aren't already fully funded for emergencies, you should add some of your wedding money to that fund. Here's the "Murphy's law" of marriage: As soon as you say, "I do," something will wind up breaking or going wrong. If you don't have an emergency fund, you risk having to go into debt to deal with that inevitable problem. Do the future-expecting-parents-version of yourselves a favor, and build up that emergency fund until you're prepared to cover at least three to six months' worth of necessary expenses.

Develop Good Financial Habits

In our first month of marriage, we already discussed our joint financial habits—how we wanted to budget as a unit, whereas individually we used different tactics. My wife likes to know every dollar she spends; I like to know what my bills are, and then focus on managing my spending. We're still working out our joint budgeting style, but we both agreed during the holidays to sign up for the budgeting app YNAB and begin zero-based budgeting.

In most couples, there's a spender and the other is thrifty. In order to get on the same page, you have to figure out how to compromise so that neither one hurts the couple's financial prospects for the future. For example, what's the dollar limit you can spend on an item before you have to call the other spouse for permission? This isn't to establish a police state in your household. It's to establish accountability, trust and a good financial habit.

Since I'm self-employed and she has no 401(k) plan at work, we've already discussed how we'll save for retirement and how much we're going to contribute as a percentage of our combined incomes. This is somewhere I think that newlyweds fall off. You are now in a legal agreement that attaches you together for life (unless you dissolve this agreement). It's time to start developing habits that will affect the end of your life, just as you are creating habits for your present. Figure out what it'll take to live your ideal life, and then begin saving together out of each of your incomes.

Conclusion

Hitching your wagon with someone else for life is a big step. I've listed a few things to look at in the honeymoon phase, but the struggle isn't over after that. It's just beginning. I believe in building a solid foundation from day one and continuing your financial commitment to each other for decades to come.

Stephen is the founder of Ignite Financial, a financial planning firm focused on serving millennials, young professionals and tech-savvy households. He is a member of the XY Planning Network.