(This is a guest post from one of my friends, Penn Ross. He is a financial writer who has profound knowledge on the financial industry. He is associated with Oak View Law Group. To know more about him, you can visit here. Thanks for sharing, Penn!)
Newly-weds should avoid incurring debt as much as possible.
In marriage, as in life, there are no guarantees. Among the uncertainties you have to deal with is how to address your finances when you are already together...forever!
Whether you get married at the age of 20 or 50, you will certainly find yourself party to someone else’s credit card debt, student loans or even foreclosures. The very thought of marriage and longtime partnership with your spouse sounds super romantic!
However, consider this scenario: even though you might not have any monetary skeletons in your closet, once you get married, you have to take thoughtful decisions about your finances. If you want to avoid debt through options that are within your means, here are some personal finance tips that you might need to practice:
Don’t jack up your lifestyle:
It is nothing but an erroneous belief that two can easily live as cheaply as one. Although it is possible to save money on home-cooked meals, rent and transportation, you should not feel that you already hit the jackpot when you’re able to save a few pesos (or dollars). Follow a budget and lead your life in a shoe-string budget so that you may have enough funds at your disposal. Avoid debt by avoiding common money mistakes.
Live on 70% of your salary; save the rest:
You should not expect that each of you will always keep on earning the salary that you have now. Take into account the interruptions in your income that you might face. In the tough financial conditions, you can even get laid off! Therefore, both of you should live on only 70% of your combined salary! Save the rest of the funds as a cushion for beating the odds of the economy. Avoid debt by saving for rainy days.
Contribute money to your retirement accounts:
If both of you are working, both should have a retirement account. Don’t make the mistake of not contributing a portion of your income to your retirement account as this is certainly a huge mistake within the present economic conditions. This is a tax-deferred growth and by having enough money in your retirement account, it is possible to secure a happy and satisfactory retired life. Avoid debt by attaining financial freedom.
Get enough insurance policy:
We should take all the required steps to insure ourselves so that we don’t burn a hole in our wallets when there is a sudden emergency. You should have the basic life insurance, health insurance and auto insurance policies so that you'll be much better off during times of emergencies.
Getting married is certainly bliss, yes. But, if you fail to manage your finances properly after marriage, all the romance might be gone and bitterness may ensue.
Friends, do your relationship a favor and manage money properly as early as now.
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