5 Financial Tips for Newlyweds
Knight Kiplinger offered his sage advice on money matters for the recently (or soon-to-be) married.
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.
Sign up for Kiplinger’s Free E-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
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
Knight came to Kiplinger in 1983, after 13 years in daily newspaper journalism, the last six as Washington bureau chief of the Ottaway Newspapers division of Dow Jones. A frequent speaker before business audiences, he has appeared on NPR, CNN, Fox and CNBC, among other networks. Knight contributes to the weekly Kiplinger Letter.
-
GM Stock Accelerates After Earnings Beat
General Motors beat expectations for the first quarter and raised its outlook for the year. Here's what you need to know.
By Joey Solitro Published
-
Georgia Has a New Income Tax Rate for 2024
Tax Cuts Georgians now have a tax package containing income tax cuts, childcare relief, and potential property tax caps.
By Kelley R. Taylor Published
-
Ease on Down the Road to Retirement
Want to keep working, just not as hard? A phased retirement may just be the answer.
By Kimberly Lankford Published
-
A Financial Checklist for Widows
An interview with a financial adviser about the financial steps widows should take.
By Janet Bodnar Last updated
-
You Should Be Investing in a 529 Now for Your Kids' or Grandkids' Tuition
Learn how to maximize investing in a 529, a state-sponsored college education savings account for qualifying educational expenses.
By Emma Patch Published
-
Get These 40 Earth Day Deals and Discounts
Monday, April 22, is Earth Day. Many of your favorite retailers are celebrating with deals on sustainable products, recycling services, and more
By Kathryn Pomroy Last updated
-
Free Coffee on National Cold Brew Day Saturday, April 20th
Just in time for National Cold Brew Day, Dunkin', Pilot and Flying J Travel Centers, La Colombe and Dutch Bros. are offering up crave-worthy deals.
By Kathryn Pomroy Published
-
Starbucks BOGO and New Sweet and Spicy Drinks
For a limited time, Starbucks is announcing four new "swicy" drinks that are both spicy and sweet.
By Kathryn Pomroy Published
-
Walmart Lawsuit: Get Up to $500 as Part of a $45 Million Settlement
You could be eligible to receive up to $500 as a result of Walmart's class-action lawsuit settlement.
By Erin Bendig Published
-
Credit Card Bonuses Up to $1,600 for New Cardholders
Earn up to $1,600 when you sign up for a new credit card. Here are the best welcome offers for new cardholders.
By Ellen Kennedy Published