Saving for the future is important at all times in our lives, but it gains additional emphasis when we get married. That is the point when we start to build new families. It might not come all at once, and many couples wait years before having children. But that's why they call it building a family. It goes step-by-step, brick-by-brick. And, unbeknownst to too many newlyweds, it is dreadfully expensive.
Later this year I will marry the woman of my dreams. We are fortunate in many ways, but when it comes to building a family we are lucky in many more. Several of our friends have gotten married in the last few years, and we've learned different lessons from each of them. With their advice, combined with the advice of our loving parents, we have created a plan that should keep us financially sound for some time to come.
And it all starts before you say, "I do."
1. Start before you get married
The smartest thing we've done is to plan our financial lives several months before our nutpials. We don't have joint checking accounts or anything, but we've kept on each other to be smart with how we spend our money. No more impromptu $200 dinners, no more lavish nights on the town. We've started discussing even minute financial outlays, so that we understand how much money we stand to earn as a couple in a few months.
Starting early also means setting goals. When do we want to have kids? When do we want to buy a house? With answers to, or at least ideas about, those two big questions, we can plan more accurately. Then those questions turn into, how much do we want to save first? And that gives us another goal. Given what we've learned from other couples, this pre-marriage financial planning will go a long way.
2. Record your spending
In modern times we have become separated from our money. Instead of parting with cash, or at least balancing our checkbooks, we simply swipe and purchase. Our money has become not a physical asset, but rather a number attached to a bank. On the whole the advancements in financial technology have proven helpful, but we still need that connection with our money. The lack of connection with money is one reason so many people are in debt. They swipe and leave without a thought of how they can afford to repay that debt.
For years I've used Mint.com to keep track of my finances, but even this is not enough. The most effective way to record your finances is to hold onto every receipt and make a ledger. It can be as simple as an Excel spreadsheet, but there needs to be some place you record every instance when you spend money. You can then reflect on that list and learn about your own spending habits. That will reveal many important things do you, as you'll see directly in the next section.
3. List your priorities
Once you know how you spend your money, you can start to examine what you can do without. In order to generate a useful list, couples need to map out their priorities. What do you value? What are your passions? What activities take your head out of the 9-to-5? Those are expenses that can stay. It might feel odd to cut out things that you've grown accustomed to in the past, but eschewing them in the future will have financial and mental benefits.
When you figure out what is most important to you, the rest seems to matter that much less. For instance, a few years ago I ran a similar experiment myself, listing out the things that made me happiest. Good food and good books ranked as the top two, and it made me think deeply about what made me happy. I then looked over my spending ledger and was aghast at how much I spent on things I didn't really care about. The resulting behavior changes reflected in my bank account.
4. Wait for deals
The concept of saving money as a new homeowner could be an entire post itself. While a home might look like a bargain -- the mortgage, even including property tax, is likely cheaper than what you previously paid in rent -- there are so many parts of a home that will cost you more money than you imagined. Some of these are urgent and simply cannot wait. If your water heater goes, you have to repair or replace it immediately. But there are other improvements that can wait until you'r eready to make them.
How do you know when you're ready? When you have enough money in your home improvement fund, of course. But even then, that money might work for you better elsewhere. The truth is that everything goes on sale at some point or another, whether through an in-store promotion or a coupon. Whether it's lumber for your new deck, or deals on kitchen appliances, you can probably wait -- both until you have sufficient funds and until the products are discounted.
5. Pay yourselves first
When you get a paycheck, that's your company paying you. Their money is now your money. When you pay your mortgage, buy groceries, or go shoe shopping, you're paying others. Your money is now their money. For too many couples, that cycle works in perpetuity. Money comes in, money goes out. Too few couples make sure to pay the most important people: themselves.
Portioning off a certain percentage of your income forces you to save for the future. That can be for anything from emergency home improvements to family vacations and even to college. It also forces prioritization, since it leaves couples with less money to spend on frivolities. The resulting discipline can come in even handier when income increases. Nothing spurs savings like earning more money without increasing your financial needs.