Money Management Tips for Newlyweds
June is traditionally the most popular month for weddings. To keep the joy lasting beyond the honeymoon, newlyweds should not wait until the first bills come to talk about finances.
"Financial problems are one of the leading causes of divorce, but much of the financial stress can be avoided if you have a financial plan and start out with good habits before you get married," says Bill Hardekopf, CEO of LowCards.com.
Here are a few money management tips for newlyweds:
1. You have a wedding rehearsal to know where you stand, you should also have budget rehearsals to know where you will stand financially as a couple. Don't assume that because you are combining incomes that you will have twice as much money. Before you get married, calculate your combined income, debt, savings, assets, and expenses to know exactly what you have and what you will have to pay.
2. List all of your debt: credit cards, student loans, car loans, wedding/honeymoon bills, engagement ring payments, mortgage, money owed to parents, etc. Your monthly debt, including your mortgage, should not be over 35% of your gross income.
3. Get a copy of both of your credit reports. This will give a clear picture of how both of you handle money and it will help avoid any future surprises. Aim to get your score over 750 in order to receive the lowest interest rates for your first mortgage and other loans.
4. Control your loans. Don't apply at the same time for a mortgage, an auto loan, a credit card, and finance new furniture, especially during the first year of your marriage. Each of these will be reported on your credit score. Multiple new loans will be a red flag that you are a credit risk. This can reduce your credit score and increase the interest rates you will pay. Just because you qualify for a credit card or mortgage doesn't mean that you can afford it.
5. Don't use a credit card if you can't pay for it with cash. If you currently carry a credit card balance, pay for everything in cash until the credit card balance is paid off. When you have a credit card balance, every additional purchase you make with that card is a loan and will add interest to the original purchase price.
6. Keep major purchases, savings accounts, loans, and credit cards in both of your names so that you each have equal access and can build a good credit history.
7. Keep the existing credit card and loan accounts in the original holder's name. This will help avoid hurting the credit score of the other partner.
8. Admit to being a spender or a saver. With a budget and compromise, these types can live in harmony together.
"Financial problems are one of the leading causes of divorce, but much of the financial stress can be avoided if you have a financial plan and start out with good habits before you get married," says Bill Hardekopf, CEO of LowCards.com.
Here are a few money management tips for newlyweds:
1. You have a wedding rehearsal to know where you stand, you should also have budget rehearsals to know where you will stand financially as a couple. Don't assume that because you are combining incomes that you will have twice as much money. Before you get married, calculate your combined income, debt, savings, assets, and expenses to know exactly what you have and what you will have to pay.
2. List all of your debt: credit cards, student loans, car loans, wedding/honeymoon bills, engagement ring payments, mortgage, money owed to parents, etc. Your monthly debt, including your mortgage, should not be over 35% of your gross income.
3. Get a copy of both of your credit reports. This will give a clear picture of how both of you handle money and it will help avoid any future surprises. Aim to get your score over 750 in order to receive the lowest interest rates for your first mortgage and other loans.
4. Control your loans. Don't apply at the same time for a mortgage, an auto loan, a credit card, and finance new furniture, especially during the first year of your marriage. Each of these will be reported on your credit score. Multiple new loans will be a red flag that you are a credit risk. This can reduce your credit score and increase the interest rates you will pay. Just because you qualify for a credit card or mortgage doesn't mean that you can afford it.
5. Don't use a credit card if you can't pay for it with cash. If you currently carry a credit card balance, pay for everything in cash until the credit card balance is paid off. When you have a credit card balance, every additional purchase you make with that card is a loan and will add interest to the original purchase price.
6. Keep major purchases, savings accounts, loans, and credit cards in both of your names so that you each have equal access and can build a good credit history.
7. Keep the existing credit card and loan accounts in the original holder's name. This will help avoid hurting the credit score of the other partner.
8. Admit to being a spender or a saver. With a budget and compromise, these types can live in harmony together.
Posted by Lynn at
11:25 PM
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